Hewlett-Packard Corp. (NYSE: HPQ) reported very decent quarterly results Tuesday after the market close. The world's currently-largest PC maker reported a net profit gain of $2.03 billion, up from the year-ago period gain of $1.78 billion on the back of a $28 billion quarter in sales.
The company's EPS was 86 cents, beating analyst estimates of 84 cents. In news that was not shocking, 68% of HP's sales were from overseas markets, although that was a drop of 2% from the Q2 period. HP, like many manufacturers, has its wings spread out so far in global markets that it was able to weather the U.S. market downturn.
HP guided its Q4 sales at over $30.2 billion, although CEO Mark Hurd indicated that his company's introduction of sleep laptop designs was making a splash worldwide. "You've got a lot of places around the planet where the only access to the digital content out there is through a notebook and a wireless card ... we have a significant opportunity.''
He's right. How many households are transforming to a multi-notebook, wireless environment without a desktop in sight? In addition to that, HP's global finesse and product mix is continuing to beat competitor Dell, Inc. (NASDAQ: DELL), even though Dell wants to change that.
Energy Stocks: Time for a Fresh Look After the recent sell-off in energy shares, S&P has boosted its recommendation on the sector to overweight. Here's why. Energy Stocks: Time for a Fresh Look - BusinessWeek
Consumers Feeling Fallout of Fannie & Freddie Fannie Mae and Freddie Mac may or may not need a government bailout, but the turmoil surrounding the mortgage finance companies' decline has already meant four things for borrowers: higher interest rates, more fees and closing costs, bigger down payments and fewer loan choices. Consumers Feel Fallout from Fannie, Freddie - AOL Money & Finance Also: Future of Fannie & Freddie Uncertain
U.S. stock futures were higher Wednesday morning, indicating markets could start on a positive note after two days of declines. Good results from Hewlett-Packard helped lift sentiment, overshadowing financial sector concerns, despite new worries over Fannie and Freddie. Oil remained steady ahead of inventory report later today.
Hewlett-Packard (NYSE: HPQ) shares are rising over 3% in premarket trading after the computer maker reported a 14% rise in fiscal third-quarter earnings and issues current-quarter earnings guidance that exceeded analyst estimates. Tech shares could get a boost from H-P.
Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) remain in focus due to concerns that a government bailout of the two firms is inevitable and would mean wiping out investors. Freddie Mac on Tuesday was forced to pay its steepest borrowing premium in 10 years, which is raising fresh concerns about its ability to withstand the housing and credit crisis without government help.
eBay Inc. (NASDAQ: EBAY) is cutting fixed-price seller listing fees. eBay will now charge 35 cents to list any number of the same types of fixed-price items. This is a dramatic change from charging fees based on item price.
U.S. stock futures were lower Tuesday morning, indicating stocks would likely start the same. Investors' concerns about the financial sector dampened sentiment, but oil prices continued to decline and could offset some of the negative mood. Still, housing and inflation data are on tap before the market opens today. And of course earnings with The Home Depot already beating investors' expectations this morning but with Staples issuing a warning.
A day after smaller Lowe's (NYSE: LOW) reported a profit drop, The Home Depot (NYSE: HD) followed suit, reporting a 24% profit decline for the second quarter. It held onto its earnings outlook as second-quarter net fell 24% to $1.2 billion, or 71 cents per share. Sales declined 5.4% to $21 billion. Analysts had projected earnings per share of 61 cents on revenue of $20.58 billion. Home Depot shares rose 2% in premarket trading.
Other retailers scheduled to release earnings include discounter Target (NYSE: TGT) -- could it follow Wal-Mart's results? -- while Hewlett-Packard (NYSE: HPQ) is to report after the close -- AP preview.
Meanwhile, Staples, Inc. (NASDAQ: SPLS) issued a profit warning, saying that "Challenging market conditions continued during the company's second quarter, resulting in weaker than anticipated results in Staples' pre-acquisition business." Staples said sales increased approximately 3% and earnings per share decreased approximately 15% yoy. Shares of Staples declined nearly 6.5% in premarket trading.
Analyst Shaw Wu of American Technology Research said his firm's checks with suppliers indicate some weakness in HP's (NYSE: HPQ) inkjet sales and consumer PCs in the U.S, according to the AP.
Rival home improvement chains Home Depot Inc. (NYSE: HD) and Lowe's Companies Inc. (NYSE: LOW) are scheduled to report quarterly results this week. Not surprisingly, given the ongoing housing slump, analysts surveyed by Thomson Financial on average expect both companies to post earnings lower than in the same period a year ago. For Home Depot, that's 61 cents per share, down 20.8%, and for Lowe's, 56 cents per share, down 16.4%. Meanwhile, cabinet maker American Woodmark Corp. (NASDAQ: AMWD), for whom Home Depot and Lowe's are major distributors, is also expected to report lower earnings: 11 cents per share, down 67.6%.
The presidential campaigns have prompted much discussion of energy policy and alternative energy sources. Some solar-energy-related concerns are scheduled to report this week, and expectations seem to be high. Trina Solar Ltd. (NYSE: TSL) is expected to report 81 cents per share earnings, up 67.9%; ReneSola Ltd. (NYSE: SOL) is expected to post earnings of 32 cents per share, up 62.5%; and Suntech Power Holdings Co. (NYSE: STP) is expected to have earnings of 32 cents per share, up 21.9%. Even China Sunergy Co. Ltd. (NASDAQ: CSUN) is expected to have swung to a profit of 3 cents per share, from a per-share loss of 14 cents a year ago.
LSI Corporation (NYSE: LSI) designs, develops and markets semiconductors used by original equipment manufacturers in the data networking and consumer electronics markets. It also provides a wide variety of storage systems, sub-assemblies, and storage management software applications. Top clients include Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM) and Sony (NYSE: SNE).
The firm surprised the Street late last month, when it reported Q2 EPS of 13 cents and revenues of $692 million. Analysts had been looking for nine cents and $665.5 million. Management also guided Q3 EPS to 11-15 cents (11 cent consensus) and Q3 revenues to $695-$725 million ($693.41M consensus). The CEO noted that the company had recently secured silicon design wins with top-tier hard drive and server makers.
10 Tech Giants to Buy Now Shares of companies such as IBM, Nokia and Microsoft have taken a hit along with the rest of the market, but they don't deserve to be this cheap. Other tech stocks to consider include Apple, Cisco, Google, HP, Intel, Oracle and Qualcomm. Ten Tech Giants to Buy Now - Kiplinger.com
New Life for Grocery Store Standbys Innovation is Pinnacle's lifeblood. The N.J.-based company -- which so far owns or licenses more than a dozen food brands -- specializes in acquiring venerable, but stagnant, brand names in need of TLC. It then works to breathe new life into them with updated formulations, new products, improved packaging, added convenience and smart marketing. Among the brands in Pinnacle's cub bard are Duncan Hines, Lender's Bagels, Log Cabin, Hungry Man, Mrs. Butterworth, Aunt Jemima, Swanson and more. Pinnacle gives new life to old standbys - USATODAY.com
Merrill upgraded shares of AstraZeneca (NYSE: AZN) to Neutral from Underperform to reflect the company's pipeline momentum and lack of negative catalysts.
Keefe Bruyette upgraded Deutsche Bank (NYSE: DB) to Outperform from Market Perform on valuation as they believe DB should trade at a higher multiple.
Merrill cut Novo Nordisk (NYSE: NVO) to Underperform from Neutral as the firm sees better opportunities elsewhere in the sector.
Merriman downgraded Rackable Systems (NASDAQ: RACK) to Neutral from Buy following the company's mixed Q2 results to reflect its customer concentration and fluctuating margins.
Janus Capital (NYSE: JNS) was downgraded at JP Morgan to Underweight from Neutral.
Fortress (NYSE: FIG) was cut to Sell from Hold at Citigroup.
Analyst initiations:
UBS believes Apple (NASDAQ: AAPL) has a competitive advantage and their checks indicate new Macs, new iPhone colors and potentially new iPods may come early on in the second half of 2008. The firm initiated shares with a Buy rating and $195 target. UBS also initiated Dell Inc. (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) at Neutral.
KeyBanc initiated Bed Bath & Beyond (NASDAQ: BBBY) with an Underweight rating and $25 target based on slowing core growth at Bed Bath and likely margin erosion from the ramp in growth at Christmas Tree Shops and buybuy Baby.
Infineon (NYSE: IFX) was initiated with a Buy rating at Deutsche Bank.
Citigroup upgraded shares of Amgen Inc. (NASDAQ: AMGN) to Buy from Hold and raised the target price to $70 from $50 following AMGN's better-than-expected Q2 results and positive Dmab results.
Credit Suisse upgraded Electronic Data Systems (NYSE: EDS) to Neutral from Underperform and expects the Hewlett-Packard (NYSE: HPQ) transaction to close at the $25/share price.
Analyst downgrades:
JP Morgan downgraded OmniVision (NASDAQ: OVTI) to Neutral from Overweight citing slowing growth and increased competition, as well as the impact on margins.
KeyBanc said Visa's (NYSE: V) strengths are its recurring revenue model, significant pricing power, no consumer credit risk, operating leverage, expense flexibility, and considerable free cash flow, among other reasons. The firm initiated shares with a Buy rating and $94 target.
Regal Entertainment (NYSE: RGC) was assumed at Caris with an Average rating and $18 target. The firm sees tough comps ahead for the company and does not expect any meaningful price increases.
Caris also initiated Marvel Entertainment (NYSE: MVL), as they are positive on the company's new financing vehicle. Shares were initiated with a Buy rating and $45 target.
Dell, Inc. (NASDAQ: DELL) made quite a few changes in 2007. Its founder, Michael Dell, came back to lead the company, it entered the retail market in the U.S. in a large way and it began introducing more appealing laptop PC designs to cater to the consumers who love choice. As a result of all these changes, CEO Michael Dell is now predicting a strong second half for Dell in 2008.
Dell mentioned that the company he founded would "have a big second half" based on numbers so far in 2008. Dell's consumer business sales rose 20% for the Q1 period ended on May 2, and Dell is predicting even stronger growth for the current quarter and the Q3 period as well.
Based on all the strong moves Dell made in 2007 and into the last fiscal period, he could be right. Dell's retail partnering in the U.S. and with Gome in China is going to mean some wicked business the rest of this year. However, competitor Hewlett-Packard Corp. (NYSE: HPQ) recently unveiled one of the largest product refreshes in its history and Apple, Inc. (NASDAQ: AAPL) just moved past Taiwan's Acer to take the third spot in U.S. PC sales. It won't be a simple task for Dell to keep this segment growing like it has predicted.
And that's just the consumer PC business. Dell's efforts in the large market area that includes Russia, China, India and others grew at a 58% pace in the company's Q1 period, and a grouping of emerging markets accounted for 12% of Dell's sales in the Q1 period as well. Add that to its push into a huge "cloud computing" marketing towards customers who order hundreds or even thousands of servers at a time, and Dell has many tricks up its sleeve to keep things growing at a decent pace.
JP Morgan downgraded big China-based PC maker Lenovo. According to Reuters,the brokerage cut Lenovo "to neutral from overweight due to a near-term slowdown in revenue growth from weak China demand and a slower ramp-up of the U.S. consumer business."
That is not exactly good news for U.S. PC companies Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) that already appear to be losing market share to the Apple (NASDAQ: AAPL) Mac. China is a critical market to both companies, and any sign of further stress in the U.S. market does not leave them many regions to make up for faltering demand.
Wall Street is already concerned that a recession in the U.S. and slowing economies abroad will hammer the PC market. Like most American companies, HP and Dell thought they could always rely on the rapidly expanding markets in Asia.
It turns out that the best laid plans are not working out.
Douglas A. McIntyre is an editor at 247wallst.com.
Shareholders of EDS Corp. (NYSE: EDS) are starting to fidget in their collective seats now that the a shareholder meeting between the company and suitor Hewlett-Packard Corp. (NYSE: HPQ) is scheduled for July 31st. The delay is being brought on by a contingent of shareholders that believes the price H-P will be paying for EDS is, of course, too low.
The shareholders claim that the $25 per share price is too low in addition to a provision that doesn't allow the EDS board to accept higher offers, should one be brought forth. Dallas-area law firm Baron & Budd said "With increased revenues over the past 12 months and 2008 projections on track, the shareholders are questioning why EDS is accepting what many experts consider to be an undervalued share price." Since EDS is headquartered in Plano, Texas -- just outside Dallas -- perhaps some heavy-handed Texas shareholders don't want to sell out to a west coast firm? Who knows.
EDS continues to believe the acquisition by H-P is still in the best interests of the company. A combined HP-EDS would have more than 200,000 employees with operations in more than 80 countries. The combination would form a large challenge to business services and consulting company IBM Corp. (NYSE: IBM) as H-P tries to conquer yet another giant after taking the PC sales leadership crown from Dell, Inc. (NASDAQ: DELL) in 2007.
Apple Inc. (NASDAQ: AAPL) is reporting its fiscal third quarter financial results Monday, July 21, after the close. The question is not only what Apple will report, but also how the Street will react, and most important, is it a buy ahead of earnings?
In terms of numbers, according to Thompson Financial's survey of analysts, Apple is expected to report net income of $972.6 million, or $1.08 per share, on sales of $7.4 billion. That's an 18.9% profit growth and a 37% sales growth.
Investors will be interested in the following:
iPhone sales numbers for Q3 may not interest investors that much, as the new 3G iPhone was released in fiscal Q4, and that is expected to be the main driver of iPhone sales going forward. The launch, despite its technical glitches was very successful, but investors might be concerned over Apple's ability to supply the demand. Already German and many U.S. stores have experienced shortages.
Most investors probably think that PC sales in the U.S. are a bit slow these days because of the recession. Now, they can sleep better because industry figures for Q2 show they are right. According toThe Wall Street Journal, "Gartner Inc. said world-wide PC shipments grew 16% in the period, with U.S. shipments growing 4.2%."
The only real warning sign in the data is that units sales growth is slowing some in Asia. Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) still have the largest market shares worldwide while Apple (NASDAQ: AAPL) shipments grew 38% in the U.S. during the period.
The important news is that Asia may not be able to make up for slowing U.S. sales growth. If formerly hot markets like China and India are not doing terribly well, the entire PC industry is in for a choppy time.
The data contradicts information from the recent Intel (NASDAQ: INTC) earnings. Not only is the company doing well, it said the rest of the year looked bright. Someone must be doing OK selling PCs and servers somewhere. The Gartner research appears to say otherwise.
For investors in PC and chip companies, it appears the information about how the industry is doing has become confused. Now they can join shareholders in almost every other sector of the market where no one seems to have a handle on what is happening.
Douglas A. McIntyre is an editor at 247wallst.com.
Hewlett-Packard Corp. (NYSE: HPQ) reported very decent quarterly results Tuesday after the market close. The world's currently-largest PC maker reported a net profit gain of $2.03 billion, up from the year-ago period gain of $1.78 billion on the back of a $28 billion quarter in sales.
U.S. stock futures were higher Wednesday morning, indicating markets could start on a positive note after two days of declines. Good results from Hewlett-Packard helped lift sentiment, overshadowing financial sector concerns, despite new worries over Fannie and Freddie. Oil remained steady ahead of inventory report later today.
U.S. stock futures were lower Tuesday morning, indicating stocks would likely start the same. Investors' concerns about the financial sector dampened sentiment, but oil prices continued to decline and could offset some of the negative mood. Still, housing and inflation data are on tap before the market opens today. And of course earnings with The Home Depot already beating investors' expectations this morning but with Staples issuing a warning.
Rival home improvement chains 
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