Dell (NASDAQ:DELL) and HP (NYSE:HPQ) will likely post solid results when they report their calendar second quarter earnings on August 19. The results are likely to be closely scrutinized by technology industry watchers who may be a bit skittish after Cisco’s executives talked about increased uncertainty in the enterprise market in conjunction with the networking giant’s most recent quarterly earnings release.
Solid results are the expectation, though, from Bernstein Research senior analyst Toni Sacconaghi, who issued a brief report previewing the expected results from Dell and HP.
HP has pre-announced preliminary fiscal third quarter results above what analysts had expected -- $30.7 billion, with earnings per share of $1.10.
“We were surprised by the magnitude of HP’s beat, particularly on revenues, which appears to suggest that the company saw no discernable slowdown in demand through the quarter,” Sacconaghi wrote. “That said, our channel checks point to a larger than normal channel inventory build in the U.S. at the end of the quarter, and HP’s fiscal fourth quarter guidance was notably below normal seasonality. We suspect HP’s guidance was due to conservatism in the face of macroeconomic concerns, high U.S. channel inventory and not having a CEO, rather than a deteriorating business environment.”
Bernstein expects Dell to report revenues of about $15.29 billion and earnings per share of 31 cents.
“Our PC forecast of 17 percent unit growth in 2010 assumes below normal seasonality in the second half of the calendar year 2010,” he wrote. “We believe both companies can withstand some sluggishness in U.S. consumer PCs, but second half estimates could be challenged if weakness extends more broadly.”
Channel checks indicate that U.S. enterprise demand remains solid for PCs and enterprise equipment, he wrote, but that Europe is still the source of some uncertainty and back to school sales of consumer PCs in the United States have been slow this year.
“They key question is whether U.S. consumer softness extends to enterprise and government sectors, given that U.S. consumer PCs amount to only 17 to 18 percent of PC units for HP and Dell and PCs account for 32 percent of HP’s and 55 percent of Dell’s revenues.
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Hewlett-Packard 
