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Hewlett-Packard: Show Us The Growth

Tuesday, 19 Feb 2008 | 2:15 PM ET

HEWLETT-PACKARD (HPQ)

Leading builder of computers and printers for both businesses and consumers. Dow component.

Reports Q1 earnings Tuesday 2/19 at approx. 405p ET. Conference call at 5p ET.

Hewlett-Packard
Hewlett-Packard

WHAT WILL MOVE THE STOCK:

WHERE'S THE GROWTH? - Much of the revenue growth should be in PC sales. Credit Suisse thinks PC unit sales growth will be around 22 percent -- well above the industry average of 15 percent, but still below the 30+ percent Hewlett-Packard has averaged over the last three quarters.

DON'T FORGET THE DOLLAR - Citi thinks the weak dollar will help HPQ's top line even more than PC growth. Citi predicts revenue growth of $700 million to $800 million from forex, with PC growth contributing about $500 million.

PRINTING BIZ - One of the company's most profitable areas. Are profit margins staying high?

THE TECH MESSAGE - Will strong results from HPQ be seen as proof that tech spending is still strong? Will poor results fuel a tech sell off? Look for signs that show how much of HPQ's success (or failure) is due to the company's own strengths and weaknesses.

GUIDANCE - Any changes to previous guidance? Considering HPQ stock's decline from November highs (see factoids below), reassuring guidance could fuel a further bounce off of recent lows. On Dec. 11 HPQ told analysts it expects FY '08 EPS of $3.32 - $3.37 and revenues of $111.5 billion. The company also said it expects FY '09 earnings $3.74 - $3.84 and revenues of $117.1 billion - $118.2 billion.

ESTIMATES:

Q1 Estimates: EPS up 24 percent to $0.81, revenues up 10 percent to $27.642 biln

Q2 Estimates: EPS up 17 percent to $0.82, revenues up 8 percent to $27.449 billion

FY 08 Estimates: EPS up 15 percent to $3.36, revenues up 7 percent to $111.758 billion

FY 09 Estimates: EPS up 13 percent to $3.80, revenues up 5 percent to $117.813 billion

Source: Thomson Financial

Year-ago actuals: Q1 EPS $0.65, Rev. $25.082 billion

Factoids:

TOUGH QUARTER FOR HPQ OWNERS - On November 6, HPQ shares closed at a 7-year high of $53.41. Three months later, it closed 24 percent down from that peak ($40.50 on February 7) at a ten-month low. On the bright side, HPQ is up more than 10 percent in the last two week.

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