By Benjamin Pimentel
Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL) are expected to
highlight a rebounding personal-computer market, marked by strong
consumer demand and a big push in the corporate sector to replace
aging machines, when they report results for the April quarter next
week.
The two PC giants are also seen riding a wave of stronger demand
for servers, as the corporate-technology market bounces back from
the server slump that followed the economic downturn.
"The PC market is definitely stronger, with notebooks continuing
to be a big driver for both the consumer and the corporate
markets," Kaufman Bros. analyst Shaw Wu said in a phone interview.
"You're seeing signs of a firmer tone in corporate, even for
desktops."
H-P, the world's No. 1 PC maker, is scheduled to report earnings
on May 18. Analysts expecting the company to post earnings of $1.06
a share, on revenue of $29.86 billion, according to a consensus
survey by FactSet Research.
That's an improvement from the year-earlier period when the
company reported earnings of 86 cents a share on revenue of $27.4
billion.
"We believe that H-P had a solid April quarter," BMO Capital
analyst Keith Bachman said in a note to clients Friday.
Bachman specifically cited the company's strength in printers,
saying, "Despite the inventory issues, we believe demand for H-P's
printers was strong throughout the quarter, with healthy laser
printer unit growth."
On the other hand, he added, "We believe that the PC division
likely lost share in the quarter, and we project revenue to decline
by 10% quarter-on-quarter."
Barclays Capital analyst Ben Reitzes also wrote that H-P may
show "some weakness in services and software, while PC's may lack
as much upside as usual given a quarter-on-quarter share loss and
some moderation in the consumer notebook market momentum at the end
of the quarter."
H-P is also expected to shed more light on its plans in relation
to its proposed acquisition of Palm Inc. (PALM) which is seen as
potentially shaking up the mobile-computing arena.
Meanwhile, Dell is scheduled to report fiscal first-quarter
financials on May 20. Analysts expect the company to report
earnings of 26 cents a share, on revenue of $14.25 billion,
according to a consensus survey by FactSet Research.
That's also a step up from the year-earlier period when the
company reported earnings of 15 cents a share, on revenue of $12.34
billion.
Dell has struggled with stiffening rivalry with H-P, and the
need to boost its product portfolio in such areas as services and
software.
"We believe the biggest questions for Dell this quarter will be
around the impact of component prices in the quarter, cost cutting
progress, the status of Dell's volatile consumer strategy,
Perot-related synergies, tone around enterprise demand and Dell's
appetite for additional acquisitions," Reitzes of Barclays said in
a note.
Bachman of BMO Capital also wrote he sees Dell's "investments
will limit near-term operating leverage and keep upward earnings
revisions in check, which we believe will ultimately keep the stock
in check."
However, Bachman also noted that, "to be fair, on a relative
basis, we believe that Dell will report better results/guidance (in
the case of HP) vs. consensus for the April quarter than will HP,
which has not happened in some time."
-Benjamin Pimentel; 415-439-6400; AskNewswires@dowjones.com