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H-P's Vulnerabilities Starting to Show

SAN FRANCISCO -- Hewlett-Packard (HPQ - Get Report) has been an island of calm and stability during the past year's economic turmoil.

But ominous clouds are drifting over the tech giant's sanctuary.

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The strong overseas demand that allowed H-P to skirt the U.S. slowdown looks less reliable every day, while the favorable currency exchange rates that juiced H-P's revenue are fading.

Cramer: Look Past the Quarter on H-P

And soft spots are appearing in certain corners of H-P's business: U.S. PC shipments grew a modest 5.6% in the second calendar quarter at H-P, compared to Dell's (DELL - Get Report) 11.9% growth and Apple's (AAPL - Get Report) 38% growth, according to industry research firm Gartner.

How this all plays out in H-P's income statement will become clear when the company reports its quarterly earnings after Tuesday's market close.

H-P has consistently delivered the goods for Wall Street in the era of CEO Mark Hurd, who has rejuvenated the Palo Alto, Calif., company less through bold strategic bets than through obsessively shaving costs and fine-tuning everyday business operations.

Yet even that staid game plan seems to be changing with H-P's $13.9 billion bid for technology services firm EDS (EDS - Get Report) in May -- a deal that would represent H-P's largest acquisition in years.

That deal -- which has yet to close -- has caused nervousness among shareholders who wonder whether the two companies are a good fit.

Shares of H-P are up about 8% since their most recent bottom in July, finishing Friday's regular session at $45.59, well below the 52-week high of $53.48.

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