Hewlett-Packard Preview: Expect a Good Quarter By Jay Somaney RealMoney.com Contributor 11/16/2007 4:48 PM EST

Hewlett-Packard (HPQ) will report earnings on Monday. The Street expects the company to report earnings of $0.82 cents per share on revenue of $27.39 billion for the October quarter. For the January quarter, estimates at present are for the company to earn 77 cents per share on revenue of $26.99 billion.

Morgan Stanley bravely upped the company to a Buy from a Hold this morning, just ahead of the company's earnings, which could indicate that the analyst there got a quick wink and a nod from management. The analyst based the upgrade on favorable secular trends in the PC market. We shall see on Monday what happens.

Here is what to watch for on the press release and listen to on the call:

• For the Printing division, the company is taking share away from Lexmark. Is that trend continuing? What are market share gains in inkjet hardware?
• For the PC division, How is the business faring? How is the consumer faring as far as their appetite for PCs is concerned? Look for the company to add market share in this area. This area also could help H-P provide upside to the top-line expectations.
• For the Enterprise division, How is momentum in this crucial area? Is the company seeing a slowdown in the financial services vertical due to subprime woes a la Cisco (CSCO) ? I think H-P's blade business is seeing strong demand from Enterprise, and that should help sustain momentum going forward.
• How are cost reductions progressing?
• Comments on the notebooks segment and comments about next quarter will be key.

Hewlett-Packard is a good play here given that it continues to gain share across the board and has more cost cutting room going forward. I am looking for a good quarter from the company but am not sure what management will say regarding the financial services vertical, which could lead to a panic after the numbers.

This is why I am straddling the fence, even though I think numbers will be good and guidance will be good but conservative as well. I am not wiling to deal with the specter of subprime, which is scaring this market silly.

Good luck whichever side you are playing for, dark side or good guy.

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At the time of publication, Somaney had no positions in the stocks mentioned, although positions may change at any time without notice.

Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.

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