H-P Slips Despite Setting Sales Guidance at High End of Range

Investors seem unimpressed with the company's preannouncement made on Wednesday.
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Updated from Feb. 11

Shares of

Hewlett-Packard

(HPQ) - Get Report

sagged Thursday, down 2.6% a day after the company preannounced January-quarter results in which sales came in above expectations and earnings were in line with analysts' estimates.

Shares of the tech giant, which sells servers, PCs and consumer gadgets, were recently down 63 cents to $23.21.

"Although the results are 'as expected,' we think investors may be disappointed given recent revenue and earnings upside surprises from

IBM

,

EMC

and

Sun

," said Merrill Lynch analyst Steve Milunovich. He also estimates H-P may have had as much as nine percentage points of sales help from the weak dollar. Removing the currency benefit, revenue would have been about flat with last year's levels.

But he and other analysts offered only sparing commentary, saying they need to get a better sense of the company's outlook and gather more details on the just-ended quarter before making an assessment.

H-P will host an earnings conference call and offer a more detailed release of results on Feb. 19.

On Wednesday H-P said it expects to report sales of $19.5 billion and earnings of 35 cents per share for the quarter ending in January. The early announcement was apparently an attempt to squelch speculation in advance of its official earnings release.

The sales number is at the high end of H-P's November guidance for a range of $19.1 billion to $19.5 billion and also slightly above the Wall Street consensus estimate for $19.4 billion.

Earnings per share of 35 cents is in line with estimates and H-P's earlier forecast.

Based on generally accepted accounting principles, EPS should range from 30 cents to 31 cents. That reflects adjustments of 4 cents to 5 cents for amortization of purchased intangibles.