HP's Q1: No drama counts as a win

HP is expected to report a relatively quiet fiscal first quarter that will roughly meet expectations. Chalk a drama-free quarter up as a win for HP CEO Meg Whitman.

Wall Street analysts expect HP to report earnings of 87 cents a share on revenue of $30.7 billion.

Now HP's quarter isn't going to be stellar. In fact, HP's quarter is likely to be mixed, but the bar has been set low enough for the company to quietly start topping expectations. "What we are picking up are mixed trends where the company is regaining credibility with customers and fixing inventory issues in its PC and printer businesses," said Sterne Agee analyst Shaw Wu in a research note.

According to Wu, HP's weak consumer business should be offset by strength in the enterprise and SMB markets.

Among the moving parts:

• HP's outlook for the fiscal second quarter ending April 30 is expected to be in line with expectations. Wall Street is expecting second quarter earnings of 95 cents a share.
• The PC business for HP has stabilized, but the company has lost share to Lenovo and Apple, noted Jefferies analyst Peter Misek. Misek said that HP's enterprise chief Dave Donatelli has smoothed over PC business worries with customers and employees.
• Hard drive shortage impact. Analysts expect HP to take a hit from hard drive shortages, but a vast supply chain is likely to minimize the damage.
• Server demand improving? Last week, HP rolled out new ProLiant servers that are designed to be easier to provision and maintain. General availability will be in March and that could give HP a late second quarter bump.
• Autonomy integration progress. Deutsche Bank analyst Chris Whitmore said that HP investors will monitor Whitman's chat about integrating Autonomy.
• Services. HP has said that its strategy is to reinvest in the services unit formerly known as EDS. The challenge is that these investments will take time to fix the business. Whitmore said that he expects "a long, slow turnaround in EDS."

Related:

• HP blows nearly $47 million on its CEO follies
• PC bill of materials creep higher amid hard drive shortage
• HP: Five landmines ahead for 2012
• HP holds it together in Q4, but cuts outlook
• HP keeps its PC business: Price war, crumbling profit margins next | HP: We’re keeping the PC unit | HP making another run at tablets with Windows 8 |
• HP: Is it a broken company?
• HP CEO Whitman pushing for PC unit decision by end of the year
• No quick fixes at HP, say analysts
• HP’s biggest challenge vs. IBM, Oracle: Continuity
• HP CEO Whitman: PC spin-off still in play, Autonomy deal too
• HP’s CEO carousel continues: Whitman officially in, Apotheker out