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All eyes are on Hewlett-Packard (NYSE:HPQ)
this afternoon as the technology giant—a bellwether for other companies in the personal
computer, server and printer spaces, among other technologies—announces its
second-quarter earnings.

And the news looks to be bleak for printing and enterprise servers and storage.

As business and consumers continue to delay the purchase of new PCs, servers,
printers and other technologies, revenues may very well come in lower than Wall
Street analysts’ consensus estimates. So says Toni Sacconaghi, senior analyst
at Bernstein Research.

The firm is forecasting Q2 revenues for HP to be $27.1 billion, a 13.2 percent
year-over-year decline excluding currency issues and the EDS
acquisition. That compares with a 13.1 percent year-over-year decline reported
by HP in Q1.

“Consistent with other IT hardware vendors, we expect year-over-year growth
rates of ESS (Enterprise Storage and
Servers) and printing to weaken sequentially, despite April having been a
stronger month than January,” writes Sacconaghi in a brief report previewing
HP’s earnings and issued ahead of HP’s earnings release. “However, given strong
share gains, we believe that the PC division’s year-over-year growth rate in
constant currency will improve modestly.”

Bernstein, like several other analyst firms, says things still look bleak for
the printing business in Q2.

“However, we continue to believe that recent declines in both printer hardware
and supplies revenue growth are largely cyclical,” writes Sacconaghi. He points
out that HP said it will be lowering channel inventory in IPG
(Imaging and Printing Group) in Q2 and Q3 and that printer results from
Lexmark, Xerox and Canon reflect a difficult and decelerating environment for
that market, especially in laser printer products. HP’s IPG
inventory grew from one week to a staggering estimated six and a half to seven weeks
in Q1. Sacconaghi believes HP may have reduced IPG
inventory by as much as three to four weeks in Q2.

Sacconaghi further notes that imaging companies are remaining conservative in
their outlooks.

On the bright side, however, Sacconaghi says that channel checks and field
contacts, particularly in the United States, are pointing to a bit of a rebound
in demand for HP products.