Full H-P Earnings Preview (HPQ, DELL)

Hewlett-Packard Co. (NYSE: HPQ) is set to report earnings after the close of trading on Wednesday.  After the disappointing report from Dell Inc. (NASDAQ: DELL), the bar may have even ratcheted a tad lower for the team at H-P as the company is still just getting a plan underway for its Meg Whitman-lead turnaround.

Thomson Reuters has estimates of $0.87 EPS on $30.71 billion in sales; estimates for the coming quarter are $0.95 EPS on $30.41 billion in sales.  For 2012, H-P is expected to report $4.08 EPS and $124 billion in sales.

What investors need to know is that in the 60 to 90 days before now, H-P and others all had earnings estimates brought down significantly.  It also needs to be addressed that the actual earnings report itself might not matter so much.  We will be paying close attention to Meg Whitman’s turnaround plan.  The PC business cannot be spun-off.  Here are some more issues to consider.

H-P’s stock chart recently gave a failure at the 200-day moving average and that key average today is $29.39.  Its 50-day moving average is down at $27.44.  With shares at $28.96, this could be a key day for H-P that determines how technicians treat the stock for the weeks ahead.

Options traders appear to be braced for a move of only about $1.05 in either direction.  Thomson Reuters has a consensus analyst price target of about $30.50 on the stock, so the street is a bit neutral here.

Again, our main longer-term view is not going to be based upon how the company got through the Christmas quarter.  We will be looking for better guidance from the turnaround plan in the next 12 to 24 months ahead.

JON C. OGG