Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

Smith Barney points out HPQ Margin Pressure Looming

(HPQ) Reit Hold HP reported solid 2FQ04 results yesterday after the close. Revenue of $20.1B (+12%, +4% CC) exceeded our estimate and consensus of $19.2-19.3B. Diluted non-GAAP EPS of $0.34 (+19% yoy) were in line with our est and consensus, but included a $0.01 impact related to the settlement of a contract dispute with the Govt of Canada. While mgmt provided a range of 2HFY04 revenue guidance which was in line with to a billion above our prior estimate and consensus, EPS guidance was in line with the prior consensus. 3FQ04 consensus EPS should decline by a penny this morning, in line with our prior expectations. The shares should enjoy a modest relief rally this morning, but given the lack of significant changes to our previous estimates or valuation metrics, we continue to recommend that clients take profits around $22.