Much of Hewlett-Packard's earnings were a done deal due to the company's preannouncement, but there were a host of little nuggets from the conference call that are notable.
For starters, HP CEO Mark Hurd gave his outlook on component pricing, which can be a window to PC pricing, and addressed Dell's potential entry to the retail market. Overall, HP reported fiscal second quarter earnings of 65 cents a share on revenue of $25.5 billion. Excluding items, HP reported earnings of 70 cents a share. HP also upped its outlook, projected fiscal 2007 earnings of $2.75 to $2.77 a share, up from its previous projection of $2.50 to $2.55. Those earnings exclude charges and other items. Revenue for the year will be $100.5 billion to $100.9 billion.
Among the nuggets from HP's conference call:
Component pricing mix. When asked about commodity pricing, Hurd noted the following:
"Memory declined a bunch over the past several months. So we think the current prices of memory are unsustainable but they have gone down. There has been some pressure upwards on panels. I would say processor hard drives, stable, roughly where they have been."
Dell's potential entry into the retail market. Hurd noted that Dell is a potential threat.
"We actually have a bunch of competitors that vie for that shelf space today. So obviously, they're going to make decisions that make the most sense for their company. We like our position. We like our relationship with those retailers and those channels. We think, given the situation we are in today, which is also, by the way, a very global set of relationships, a pretty important asset for us and so we'll work hard to do the best we can to be the best partner to those retailers that we can be."
On how the enterprise spending environment shaped up, Hurd said the U.S. was steady.
"I would say that U.S. enterprise behaved roughly as we expected. I wouldn't get exuberant about it, nor would I go the other way on it. It was roughly what we expected. The quarter behaved roughly as we expected as well in U.S. enterprise. So we did grow, as you described, in the U.S. and we feel good about it, but it behaved roughly as we expected."
Clearly, HP's business is firing on all cylinders right now. But one question remains: What's Hurd's next act? Although analysts were praising HP Thursday morning there were a few worriers.
ThinkEquity Partners Eric Ross said in a research note that it's unclear what HP's next act will be. "Share gains in PCs, low component costs, and cost cutting cannot go on forever, and we expect HP's growth to slow," said Ross, who noted that he has clearly been wrong so far.
That theme was subtext throughout many comments. Raymond James analyst Brian Alexander was upbeat about HP, but did note the following:
"There are concerns looming on the horizon, including a potential slowdown in consumer spending or a more capable Dell that may aggressively pursue share within the retail and commercial channels. That said, we believe the company is
For now it's full steam ahead for HP.