Updated from 8:31 a.m. EST

Hewlett-Packard

(HPQ) - Get Report

, in a preliminary release yesterday, reported fourth-quarter earnings and revenue that beat analysts' estimates, and CEO Mark Hurd said the strong results mean H-P is different from its rivals.

Unlike some competitors, the company has a diverse product range and has cut costs deeply, buoying profits. The CEO's sunny outlook probably will lead analysts to raise their estimates. TSC Ratings gives HPQ a "B minus" rating, down from a "B" in August. After yesterday's news, TSC's quantitative rating could actually rise in the months ahead, based on this incremental information. Investors are optimistic -- the company's stock jumped 14.5% yesterday and was up 1.7% in early trading Wednesday.

But H-P's fourth-quarter results are, in a way, a look back in time. Similarly, our rating relies heavily on historical data and, in our view, HP's forecast for 2009 may be too optimistic to swallow. The real question is what will the figures in early 2009 and beyond actually look like.

For the stock market to take a fourth-quarter forecast to be a bullish sentiment shows how fickle investors are and how traders are looking for any news to make a quick buck. Readers, don't be fooled.

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 2527998001; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

Similar to my recent

analysis

of

IBM

(IBM) - Get Report

, H-P's history in economic downturns has been less than stellar. Its financials and share price are the proof.

Already this year, the stock has tumbled 42%. In the tech bubble, it fell from a dizzying $70 to just $10. Earnings per share fell from $1.87 in 2000 to a loss of $0.36 per share in 2002. H-P is clearly recession-sensitive, and it's only a matter of time before earnings catch up to the grim economic reality.

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) - Get Report

, and

Corning

(GLW) - Get Report

, to name just a few, and PC maker

Dell

(DELL) - Get Report

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.

Sam Patel, CFA, is the manager of mutual fund research for the TheStreet.com Ratings.

In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Patel cannot provide investment advice or recommendations, he appreciates your feedback;

click here

to send him an email.