RE: <Well.CNNFN just said HWP down 5 after blowout earnings. Now what happens to us if DELL's numbers are just good? Briefing.com, Spear Report, Bull Market report still liking DELL. Comments from anyone appreciated.>
Jeff Berkowitz of TheStreet.com says that HP had a big run up before earnings and that the earning weren't as good as they looked.
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Why Berko's Holding Off on Hewlett-Packard
By Jeff Berkowitz
8/17/99 8:11 AM ET
I'm just waiting for Cramer to call in. "How much HWP do we own?" an excited
Cramer will ask. "Sounds like a great quarter."
I fully expect the line to go silent for a few seconds as he digests my response:
none.
I sold my common and most of my 110 calls yesterday (too many bad
Hewlett-Packard (HWP:NYSE) conference calls) and slammed the remnants last
night on Instinet: "Just not good enough, don't know what results the Times and
Journal reporters were looking at." (Before we go any further, let me add that I am
not a zealous anti-dead tree prophet like my partner. I just analyze earnings reports
for a living.)
At this point Jim, whose only info on Hewlett-Packard would have been provided by
the newspapers, will understand. "Ran up too much in front," he will add. Yep, that's
exactly it. The quarter was good, not great. Solid, yet not outstanding. Take out the
interest income, seen as a one-timer, and the company beats estimates by a
penny, not a nickel. Revenue in line with to slightly below expectations; that's
certainly not good enough after the big run in the stock.
Here's the kicker: Due to the pending offering of the Test & Measurement business
named Agilent (wow, that rivals Cendant (CD:NYSE) and Venator (Z:NYSE) for
dumb names), management declined to specify orders. When pressed hard by
analysts, looking for the security blanket that the order number provides for future
prospects, management responded that orders were greater than sales. Sounds
good, huh? Wait a second. The Street wanted 16% order growth; doesn't that
answer imply something less? Definitely not good enough.
Sure, to those not as myopic as we quick-triggered traders, it was a fine quarter.
PCs and printers were very good; gross margins showed upside vs. expectations
and they beat the numbers. Bulls would argue that that you should add back $100
million. Smells like rationalization. Nice, swell, sweet, pretty, lovely ... call it what
you want, the quarter was just not good enough for me. Disaster? Nah. Let's just
revisit the stock at lower levels.
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