Goldman Sachs Conference: Analyst Sees H-P Printing a Good Number for First Quarter

Laura Conigliaro, Goldman Sachs' influential hardware analyst, wrote clients to express confidence that Hewlett-Packard (HWP) will meet First Call's first-quarter consensus earnings estimate of 83 cents a share when it reports Tuesday.

"I think the earnings estimate is pretty safe," said Conigliaro, who was feverishly writing her comment as Ann Livermore, head of H-P's enterprise computing solutions division, was finishing her presentation at the Goldman Sachs Technology Investment Symposium. Livermore spelled out the company's new e-services strategy before a packed room Thursday morning.

Conigliaro's comment is noteworthy because H-P hasn't had a lot of luck with its earnings announcements over the last two years, missing consensus estimates more often than not. "This will be the second quarter in a row H-P will meet expectations," says Conigliaro, who had expected the PC and peripherals maker would earn 81 cents per share in the fiscal first quarter ended Jan. 29. It earned 86 cents a share in its year-ago first quarter. (Goldman hasn't worked on any recent H-P underwriting projects.)

In an interview, Conigliaro also said she expects H-P will report stronger-than-expected printer sales for the quarter. "And its test and measurement division is turning around," she said, after the division disappointed in the company's previous quarter.

Conigliaro recently raised her H-P rating to market outperform from market perform. "Even though Conigliaro raised her H-P rating two weeks ago from market perform to market outperform, her conviction wasn't very strong," says a fund manager who requested anonymity and has no position in H-P.

H-P's Livermore Articulates Strategy

"It's perceived that we missed the first chapter of the Internet, so we are positioning ourselves for chapter 2," said Livermore, whose division accounted for almost a third ($15 billion) of H-P's 1998 revenue. Livermore, one of the few division chiefs presenting here among many CEOs and chief financial officers, said the company was introducing over the next few months a product that will help the back-end hubs of computers communicate with one another.

Among the e-services H-P already offers: OpenView, online management software used by such large e-commerce companies as America Online (AOL) and E*Trade (EGRP), both of which switched from IBM's (IBM) Tivoli software product. Then there's H-P's VirtualVault, a software security system that is used in 110 banks, protecting $5.6 trillion in assets.

"H-P's presentation was a lot more substantive than what Sun (SUNW) had to say yesterday," says Lenny Schuster, a money manager with Gemina Capital. Schuster, whose firm has a long position in the stock, says H-P has to get Wall Street excited again, "something the company hasn't been able to do in a long time." The current problem, he says, is that while both IBM and H-P have slow growth rates, IBM has articulated its Internet strategy much more clearly.

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