H-P Alone Can't Cure All of Tech's Ills

SAN FRANCISCO -- In these days of economic uncertainty, it pays to be vigilant about cutting costs in the face of sluggish sales growth.

Being the biggest kid on the block doesn't hurt, either. Unfortunately, the rest of the tech sector isn't quite so huge.

Hewlett-Packard(HPQ Quote) gave its shareholders a lift Tuesday, announcing that its fourth-quarter earnings and revenue would top analysts' estimates. The tech hardware giant said it expects to earn $1.03 a share on revenue of $33.6 billion.

Shares of H-P jumped nearly 10% in recent trading to $32.31. But the stock's move couldn't help the broader market sustain a rally, and the Nasdaq was recently off 1.5% to 1461. The tech index is down more than 8% in the past three sessions.

H-P cited its "global reach, diverse customer base, broad portfolio and numerous cost initiatives," meaning that it sells computers, printers and servers all over the world and is willing to do what must be done to protect the bottom line.

That's a good combination in times like these. The company benefits, as does IBM(IBM Quote), from being a truly diversified tech hardware supplier. In its most recent third quarter, 37% of the H-P's revenue came from its computer-making operations (PCs and notebooks), 25% came from printers and 17% came from selling servers.

What fate that will fall upon a more focused PC manufacturer like Dell(DELL Quote), for example, will be seen Thursday, when the company reports its quarterly results. Dell has already cut 10% of its workforce, but is reportedly still looking for more ways to slash expenses, including a five-day furlough and additional employee cuts.

H-P also has made market share gains that may continue. A recent Barron's article quoted Walter Price of Allianz Global Investors suggesting that the company would sell 10% more PCs next year, as customer's of the company's new EDS division switch over from Dell and other manufacturers.

However, the silver lining from H-P comes with its own cloud suggesting that the future for the company and tech stocks in general is still murky. The company itself called the market "challenging," on Tuesday, and immediately defined that term by telling its employees that it would extend its normally week-long holiday shutdown to two weeks to save costs.