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Hewlett-Packard Is So 2008 -- a Good Thing

Stocks in this article: HPQ DELL MSFT

PALO ALTO, Calif. ( TheStreet) -- Hewlett-Packard (HPQ) has two distinct and mostly uncorrelated business units that drive the majority of revenue for the world's largest maker of personal computers and printers.

The technology-solutions and personal-systems groups have recorded ups and downs over the past year, but they've combined to provide stability for HP, which analysts estimate will post record fiscal fourth-quarter earnings on Nov. 23. Through its dual focus on consumers and businesses, HP has effectively hedged some of the risk out of its operations, which is crucial during a time span that witnessed the longest recession since the 1930s. Dell (DELL), on the other hand, wasn't as fortuitous.

The two Hewlett-Packard units produce, on average, about $21 billion in quarterly revenue. Their results have been remarkably consistent over the past two years' boom-and-bust. As the consumer market cooled when the recession set in, the technology division picked up the slack. Some of that was due to the acquisition of EDS, which bolstered revenue by about $3.5 billion a quarter. Even without that purchase, the technology subsidiary outperformed the sagging consumer unit, which was hurt by lame demand for personal computers.

The technology-services group benefited from businesses outsourcing to save on staff salaries and other expenses. While spending on major projects by business customers was weak, the crushing effect of the recession was mitigated by customers trying to slash expenses through outsourcing.

Now, with the release of Microsoft's (MSFT) latest operating system, Windows 7, the consumer division may bounce back as customers who were waiting out the final days of Windows Vista's pathetic life finally spring for a new computer.

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