H-P Earnings Tone, No Major Jump Over Tech Peers (HPQ)

The key earnings report from Hewlett-Packard Company (NYSE: HPQ) is now out, and it appears that the company is seeing the same trends as other technology giants.  A firm recovery might not be there in technology, but it appears that the worst part of the recession in technology has been seen from the tech giant’s peers.  H-P just doesn’t feel quite as good for any major bulls based upon what we have already seen throughout the earnings season.

The IT-services and PC giant posted $0.86 non-GAAP EPS on $27.4 billion in revenues. Thomson Reuters had estimates pegged at $0.86 EPS on $27.4 billion in revenues.

As far as the company’s outlook and guidance, H-P sees revenues flat to down 2% sequentially and non-GAAP EPS coming in at $0.88 to $0.90.  The consensus estimates are $0.89 EPS and $27.49 billion in revenue for the coming quarter report.  That puts the bottom line within the range of estimates, and revenue slightly under the consensus estimates.

For the Fiscal-2009 (October), the company sees $3.76 to $3.88 in non-GAAP EPS and revenue down about 4% to 5% from 2008’s revenues of $118.36 billion.   That comes to an implied rate of $112.44 billion to $113.6 billion.  The H-P estimates are $3.71 EPS and $113.46 billion in revenues.

Revenue from outside of the United States in the second quarter accounted for 64% of total sales for this last quarter.  Adjusted for the effects of currency, revenue grew 12% in the Americas while declining 2% in Europe, the Middle East and Africa and 5% in Asia Pacific.  The weak sectors in the legacy H-P business were essentially all of them: the imaging and printing (down 23%), financial services (down 6%), personal systems or PC’s (down 19%), software (down 15%), and enterprise storage and servers (down 28%).  The company’s Services revenues rose 99% to $8.5 billion, although that reflects the EDS acquisition.

Frankly, there is really nothing wrong with H-P’s report.  This report just has a tad less of the feel of the other tech giants which have already reported earnings.  That may change in the conference call, but there just feels like little reason here to chase it.  If this wasn’t up over 40% from recent lows, then the opinion and reaction here might be a tad different.

Shares closed up 2.5% at $36.58 on an unofficial closing price and also just under its 200-day of $36.82, and its 52-week trading range is $25.39 to $49.20.  In the after-hours session, shares are trading down at the $35.20 mark after the report.

JON C. OGG
MAY 19, 2009