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HP (NYSE:HPQ) may slightly beat consensus expectations when it
announces results for its third-quarter earnings today, according to
Bernstein Research earnings preview.

Bernstein expects HP to report revenue of $27.34 billion, above the
current consensus of $27.22 billion. Bernstein is forecasting HP to
announce earnings per share of 91 cents versus the consensus opinion of
89 cents.

“We expect HP to continue to benefit from (1)EDS savings; (2) continued
cost cutting efforts in IPG and services delivery; and (3) other
discretionary savings,” writes Toni Sacconaghi in his report previewing
HP’s earnings. “Collectively we believe the impact of these forces may
be bigger than consensus modeling.”

Still, Bernstein says it doesn’t believe that corporate IT spending has improved over the last three months.

“In fact, every corporate centric company in our universe has reported
year-over-year revenue growth at constant currency that was
fractionally below Q1 levels,” Sacconaghi writes. “That said, we do
believe that IT spending is stabilizing, and the U.S. has shown some
modest signs of improvement, particularly over the last two months.”

Bernstein says that its own channel checks have indicated that HP’s
efforts to reduce its inventories for IPG in the most recent quarter
led to hardware product shortages in the current quarter that required
HP to ship printers via air-freight.  The firm expects HP’s supply
revenues to be down by 15 percent year over year, parallel to similar
declines from Lexmark and Xerox.

“We believe supplies inventory remained at the high end of the range
(at 6 plus weeks) and HP stated that it would look to further reduce
channel inventory in IPG in fiscal Q3,” writes Sacconaghi. HP’s
inventory efforts should yield another week less of channel inventory
for IPG, according to Bernstein.