What Shall I Do? HPQ

By Rex Crum SAN FRANCISCO (Dow Jones)
-- Already considered a bellwether of the high-tech industry,
Hewlett-Packard Co.'s next earnings report is likely to attract even
more attention than normal given the current industry-wide concerns
about corporate and consumer demand for technology products.

The high-tech giant (HPQ) is scheduled to report its fiscal
fourth-quarter results on Monday, Nov. 19.

Wall Street is currently expecting the company's sales to rise about 12%
from the same period last year. Analysts surveyed by Thomson Financial
estimate that H-P will earn 82 cents a share, excluding one-time items,
on $27.39 billion in revenue for the period ended Oct. 31.

Credit Suisse analyst Robert Semple on Friday left his outperform rating
on H-P unchanged, but raised his price target on the company's stock to
$60 a share from $52. Semple said H-P is heading into its 2008 fiscal
year, "With the wind at its back," mostly due to growth in its revenue
and operating margins. Semple said he expects H-P to perform more
acquisitions next year, especially in the software industry.

But while such deal may be in the works, for now, most of the attention
toward H-P will be on the company's outlook for next year, given the
recent market shakeups in the technology sector that were sparked by
cautious comments from Cisco Systems Inc. (CSCO) following its own
earnings report earlier this month.

Cisco's comments helped spark a broad sell-off of technology stocks. The
tech-heavy Nasdaq Composite Index (RIXF) has dropped more than 8% since
peaking on Oct. 31, while the Dow Jones Industrial Average (DJI) , of
which H-P is a component, gave up more than 6% during the same period.

Even H-P, which is up almost 19% for the year and has weathered the
market turmoil better than other tech leaders, saw 6.5% shaved off its
market value over the rocky trading sessions. "After IBM's weakness in
hardware and software, and Cisco's commentary about the U.S. enterprise
market, the group can obviously use some help," said UBS analyst Ben
Reitzes, who holds a buy rating on H-P's stock.

Positive views for H-P

But despite trepidation surrounding the tech sector, computing industry
analysts believe that H-P remains in a strong position.
The company's results could go a long way toward restoring some of the
faith in the technology sector that was shaken in recent weeks by mixed
results and forecasts from players such as Cisco, IBM Corp. (IBM) and
Sun Microsystems Inc. (JAVAD).

Toni Sacconaghi, of Bernstein Research, said that because of those other
reports, he expects investors "will be very focused on H-P's comments on
the IT spending environment."
However, he added that one thing in H-P's favor is that the company
isn't as dependent on the market for enterprise spending as some of its
rivals. Sacconaghi said large corporate customers account only about
one-third of H-P's sales and less than 10% of the company's revenue
comes from the financial services industry, which many tech companies
have cited as the source of their recent weak results.

"We expect H-P to deliver above consensus results, driven by continued
strength in PCs, x86 servers and currency," wrote Sacconaghi, who holds
a market perform rating on H-P's stock, in a report Thursday.

Shaw Wu, of American Technology Research, said one of the factors in
H-P's favor is that the company's "fairly balanced strength" across its
business lines. H-P currently receives about 35% of its revenue from
personal-computer sales, with 27% of revenue coming from its imaging and
printing business and enterprise systems such as servers making up 17%
of its sales.

Wu said that because of this balance, "H-P has been able to cope with
the tougher U.S. [economic] environment," and added that spending in the
company's consumer and small-and-medium sized business segments
continues to be strong and hold up above most expectation.

Wu, who holds a buy rating on H-P's stock, said he expects the company
to deliver results above the higher end of its own forecast range for
earnings of 80 cents to 81 cents a share on revenue between $27 billion
and $27.2 billion.

Dow Jones Newswires 11-18-07 2102ET Copyright (c) 2007 Dow Jones &
Company, Inc.

"By way of deception, thou shalt do war"

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