Dell, HP earnings: Can enterprise offset consumer PC weakness?

Dell and Hewlett-Packard will report financial results Tuesday and analysts are hoping for a PC health check and some insight on the corporate hardware upgrade cycle.

For HP, the pressure is more acute. HP's first quarter was solid but the outlook disappointed analysts and CEO Leo Apotheker needs to get on the board with an upside surprise and some color on the grand plan. Analysts are expecting second quarter earnings of $1.21 a share on revenue of $31.53 billion.

Fortunately, for HP and Apotheker expectations are low. Analysts are largely writing off the PC business. Collins Stewart analyst Louis Miscioscia said in a research note.

With expectations for HP as a whole pretty low, and positive tailwinds from the broad enterprise refresh cycle, HP should deliver a decent quarter after a weak January.

The upshot is that HP should get a boost from servers. "The two major questions will be the performance of the Services business and whether investors feel that management is turning things around and results have hit bottom," said Miscioscia.

However, Apotheker already warned of a tough quarter ahead in a leaked memo. HP moved its earnings release up as a result.

The story for Dell is a bit different. Dell is expected to report first quarter earnings of 44 cents a share on revenue of $15.4 billion after a strong fourth quarter.

Like HP, expectations are relatively low for Dell's quarter, but enterprise strength is likely to offset PC weakness. "We think the fairly obvious weak consumer PC results will be offset by healthy demand trends in servers, storage, and currency gains," said Wells Fargo analyst Jason Maynard.

Other analysts note that Dell's gross margins will be closely watched. Dell's outlook is expected to be strong.