One of the overlooked takeaways from the Hewlett-Packard earnings call last night was the company's outlook on Vista demand. Given that the company is the largest PC maker out there analysts were hoping to get more color about what Microsoft's latest OS will mean for demand.
Instead, HP refrained from making any predictions. Full transcript courtesy of SeekingAlpha.
HP CFO Bob Wayman said:
"On Vista, right now, as it relates to the short term, we just don't know what will happen as it comes up to the holiday and really even not just the holiday, but post-holiday to introduction may be a window that we just can't forecast well enough to be able to tell you exactly how it will work out."
In sum, Vista remains a huge wild card for the technology industry.
Other key items:
--On component pricing Wayman noted that HP "did see memory pricing pressures and availability issues in Q4" and paid "a little more money for memory than we had planned."
"We also had a few issues on microprocessors, particular types of microprocessors.Panels have been in good supply and pricing has been favorable there. Panels is one area that we have done some strategic buying, much to our advantage. Hard drives, really no change. A very competitive marketplace, availability is pretty good," said Wayman.
--On reading into a big decline into motherboard shipments out of Taiwan, CEO Mark Hurd said tech buyers shouldn't read to much into one region. Demand overall is stable.
--On commercial PC demand Hurd also noted that things were stable. "Our overall macro demand picture was roughly stable," said Hurd.
The final takeaway of the call is a between the lines observation. The honeymoon period for Hurd appears to be winding down. HP's recent quarters have largely benefited from restructuring moves and the most recent financials showed strong revenue growth. But success has its downside on Wall Street because analysts always want more. Many analysts say HP will have a harder time delivering growth in upcoming quarters.
Prudential Equity Group analyst Jesse Tortora writes:
"HP deserves credit for continuing to deliver impressive results. While we believe HP will continue to execute, we are concerned that changes in the competitive landscape across HP's major segments set the stage for slowing earnings growth over the next several quarters. We think operating margin may have peaked out at 9% this quarter."
Cowen & Co. analyst Louis R. Miscioscia writes:
"HP came through with another very solid quarter: almost every measure showed improvement, many hitting annual or multi-year highs. Regarding end-market demand, management commented that business trends were stable. We believe the key issue is that, even though results were very good, there is more room for improvement."
Other research notes were similar. At least Hurd knows what he's up against and emphasized HP can improve in many areas of its game.