H-P's Optimism Does Not Compute

The current crisis is bigger than 2001's, and cost cutting eventually becomes ineffective. A diverse product range is a strength, but not so much in a "diverse" downturn that is hitting every industry and corner of the globe. The tech sector's recently been hit with bad news from Nortel(NT), Intel(INTC), and Corning (GLW), to name just a few, and PC maker Dell(DELL) reports Thursday. From the tables below we see that 70% of H-P's revenue comes from overseas, where countries are yet to feel the full brunt of the economic storm.

The market is only oversold if company earnings improve into 2009, but that scenario is unlikely given the spate of corporations near collapse and the level of unemployment, which is increasing by the day. Earnings for the majority of companies will fall into 2009 and, with that, stock prices will follow.

Product Segments Revenues 10/31/2007 USD Millions Imaging & Printing Group 28,465 Personal Systems Group 36,409 HP Services 16,646 HP Financial Services 2,336 Corporate Investments 762 Enterprise Storage & Servers 18,769 Software 2,325 Total 105,712 Geographic Analysis Revenues 10/31/2007 USD Millions U.S. 34,814 Non-U.S. 69,472 Total 104,286 Source: Bloomberg

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