HP Beats but Guides Lower

Let’s just say Leo Apotheker’s first full quarter as CEO of Hewlett-Packard Company (HPQ) was a rather inauspicious debut. Though HP posted an earnings beat of $1.36 per share in its fiscal 1st quarter of 2011 (ended January), topping the Zacks Consensus Estimate of $1.29 by 5.4%, revenues came in light to $32.3 billion, missing the Zacks consensus of $33 billion.

However, what has sent HPQ shares tumbling more than 9% in the after-market was HP’s lower guidance for its fiscal 2nd quarter. The company expects EPS within a range of $1.19 to $1.21 per share; the Zacks consensus estimate was $1.26.

The big change at the helm — Apotheker, former head of SAP AG (SAP) took over for Mark Hurd, now Oracle’s (ORCL) President, last year — along with 5 new board members, including former eBay (EBAY) CEO Meg Whitman, was going to take some time to turn Hewlett-Packard around, but it seems these difficulties had already been priced-in by investors and analysts. The year 2010 was a rough one for HP, when its shares fell 18% on the year.

But things looked to be picking up — 14% of that loss has been made up year-to-date…or rather it had, prior to 1st quarter numbers and 2nd quarter guidance was reported after the closing bell today. In fact, in the past 30 days, 6 upward revisions had been made on HPQ shares, and the most recent estimate was $1.32 per share.

And still the company beat those upwardly revised projections. HP’s 1st quarter of 2011 marked the second consecutive positive suprise of more than 5%. So perhaps the ongoing late-trade sell-off Tuesday is a tad overdone. As of this blog’s posting, HPQ shares are down $4.44 or 9.21% per share, following a 44-cent dip to $43.23 in an overall down day of regular trading.

By: Mark Vickery

HEWLETT PACKARD (HPQ): Free Stock Analysis Report

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