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HP: Expect More PC Pressure

NEW YORK ( TheStreet) - HP (HPQ - Get Report) reports its fourth-quarter results before market open on Tuesday amid limited expectations for the no. 1 PC maker.

Last week's third-quarter miss by rival Dell (DELL - Get Report), the latest in a string of underwhelming results this tech earnings season, has done little to inspire confidence in HP's fourth-quarter numbers.

Moody's analyst Richard Lane pointed to Dell's 19% year-over-year decline in PC revenue, noting that within PCs, notebook revenue fell 26% and desktop revenue fell 8%.

"The news bodes ill for Hewlett-Packard Company, which derives 30% of revenue and 15% of total operating profit from its personal computer segment," he wrote. "Going into 2013, we expect worldwide personal computer unit sales to decline between 2% and 5%."

Analysts surveyed by Thomson Reuters expect HP to report revenue of $30.43 billion and earnings of $1.14 a share, compared to revenue of $32.1 billion and earnings of $1.17 a share in the prior year's equivalent quarter.

These are tough times to be selling computers. Declining PC and printer sales weighed heavily on HP's third-quarter results in August. The company also lowered its guidance for fiscal 2012.

Recent comments from other tech bellwethers have done little to boost investor confidence in HP, which has seen its shares slip more than 48% this year.

"With Dell, Intel (INTC) and Microsoft (MSFT - Get Report) giving disappointing comments on PC demand, investor expectations are fairly low," warned Sterne Agee analyst Shaw Wu, in a note.

Wu, who has a neutral rating on HP, anticipates mixed results from the tech giant on Tuesday. "From our supply chain work, we believe revenue will likely come in light, but EPS in line or better," he wrote, attributing the earnings number to HP's cost controls.

Wu's modeling $30.4 billion in revenue and earnings of $1.16 per share.

The analyst highlighted continued sluggish trends in PCs and printers, which will be somewhat offset by healthier trends in servers and services. Software, a key area of focus for HP recently, should also be positive, although this is still a relatively small part of the company's total sales.

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