Hewlett-Packard (HPQ) Forecast Goes Beyond PCs And Printers

By Douglas A. McIntyre Updated Apr 27, 10:54PM EDT · Published May 20, 4:26AM EDT

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The market was disappointed by Hewlett-Packard’s (HPQ) forecast for the next quarter. The technology company’s results for the past quarter were in line with Wall St. estimates.

Analysts look to H-P as a proxy for the sales of computer hardware such as printers, PCs, and servers. But, the company is in many other businesses and they are operations that have high margins that fuel the firm’s earnings. Shareholders should be more concerned with the forecasts for those divisions more than the immediate future of PC sales.

H-P was a force in the IT services sector long before it bought EDS. The acquisition makes the business of advising large companies and governments about how to best use technology a very significant part of H-P”s sales. If enterprises are cutting back on their use of these services, H-P’s ability to create profitable revenue will be compromised for the rest of the year no matter what the company does to squeeze out what it views as excess costs.

H-P faces a second problem. It has a unit that finances purchases for its customers. As the recession deepens, the default rate of that credit pool is very likely to deteriorate. H-P then faces the kind of write-offs, on a much smaller scale, that many banks face on consumer and small business debt.

Weak PC sales may be the least of H-P’s problems going forward.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.