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.
gave its shareholders a lift Tuesday, announcing that its
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
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
, 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.
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);
What fate that will fall upon a more focused PC manufacturer like
, 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
, including a five-day furlough and additional employee cuts.
H-P also has made market share gains that may continue. A recent
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.
Does a company tell its employees to not work for two weeks when things are looking up on a broader scale?
H-P also projected fiscal 2009 revenue well below Wall Street's expectations. The company now expects a top line of $127.5 billion to $130 billion; analysts had estimated $135.1 billion. However, the company did forecast EPS above analysts' consensus view.
Investors likely realized Tuesday that H-P, with its safe dividend and recent bounce off a 52-week low, is one of the few tech stocks with which to weather the economic storm.
Looking for more than that from the market seems too soon -- witness alone the recent offerings of bad tidings by
, as well as Tuesday's downcast news from
that it is withdrawing its financial guidance made just weeks ago as demand for LCD-display glass for large screen televisions and PC monitors has fallen off a cliff.
Most recent projections for information technology spending are similarly bleak, at best. Last week, AmTech projected a significant falloff in fourth-quarter PC sales, in part due to the declining euro. H-P said that a stronger dollar would take 5 percentage points off fiscal first-quarter revenue, and up to 6 to 7 points from fiscal 2009's top line.
The Nasdaq is down 15% in November, oversold by practically any measure, so stocks of large, stable companies like H-P that offer promising news can expect to find some support before the smaller fries. But for tech investors in general, it's not yet time to celebrate.