HP Quarter Earnings Expected Strong

By Reuters  |  Print this article Print

Technology giant HP is expected to report strong quarter earnings when it reports this week, affirming good corporate tech spending.

SAN FRANCISCO, Feb 22 (Reuters) - Hewlett-Packard Co (NYSE:HPQ) should reaffirm good corporate technology spending trends when it reports results, as investors wait to hear more about new CEO Leo Apotheker's vision for the future.

On Tuesday, the world's largest technology company by revenue is expected to report strong demand for networking equipment, servers and storage, but relatively lackluster sales of low-margin personal computers due to weak consumer spending.

The printing and IT services segments, which provide more than half of HP's operating profit, should turn in strong, if unspectacular, results, according to analysts.

HP's report is due to come on the heels of the company's most aggressive salvo at the wireless device market dominated by the likes of Apple Inc and Google Inc -- the Palm software-powered TouchPad.

The tablet, unveiled alongside two new smartphones, emerged from HP's $1.2 billion acquisition of Palm, a pioneer in mobile computing that had languished in the face of Apple's dominance.

HP is undergoing a transformation at the top. Last month, it shook up a much-criticized board, adding five new directors including billionaire former eBay CEO and gubernatorial hopeful Meg Whitman.

Under Apotheker, who began Nov. 1 after the stunning ouster of Mark Hurd in August, the company is expected to focus more on expanding its footprint in software.

Apotheker has remained largely silent about any plans he might have to galvanize growth and reignite innovation in the sprawling company. And investors may have to wait a bit longer to hear his roadmap.

HP and Apotheker will host an event next month for analysts and the media, in which he is expected to lay out his strategy for the company.

HP is expected to post a 6 percent rise in revenue to $32.95 billion in the fiscal first quarter ended January. It should earn $1.29 a share, according to Thomson Reuters I/B/E/S.

HP shares have rebounded lately from their lows following Hurd's departure.

The stock is already up more than 15 percent this year, but the company's valuation remains depressed. HP is trading at 9 times earnings, below rival International Business Machines Corp .

Dell's quarterly earnings last week provided technology investors a measure of comfort. HP's smaller rival enjoyed a decline in component costs that will also benefit HP, and offered concrete signs that businesses are spending again after two cash-strapped years. (Editing by Richard Chang)