HPQ Shocks the Street

Second-Quarter Earnings Release

Actual Q2 Rev:  $30.85 Bil

Actual Q2 EPS:  $1.09

Hewlett-Packard Company (“HPQ”) reported earnings that far surpassed Wall Street expectations today.  Street consensus had Q2 revenue at $29.82 Bil, with a range of $29.51 to $30.22, and EPS at $1.05.  Actual revenue of $30.85 Bil exceeded even the highest estimates of all 31 analysts covering the stock.  However, the forecasts that I published early last week called for Q2 revenue of $30.78 Bil and EPS of $1.09.  These results, as summarized in the table below, were extremely close to the reported figures.  My revenue and earnings errors were 0.23% and 0.37%, while analysts’ errors were 3.34% and 4.05%, respectively.   

	Actual	Tyler Smithson	% Error	The Street	% Error
Q2 REV	30,849	$30,777	0.23%	$29,820	3.34%
Q2 EPS	$1.09	$1.09	0.37%	$1.05	4.05%

     

Actual Q2 Earnings
Income Statement
Three months ended April 30, 2010
Net Revenue	30,849
Costs & Expenses:
Cost of Sales	$23,601
R&D	$722
SG&A	$3,064
Amortization	$347
In-process R&D Charges	$0
Restructuring	$180
Acquisition-Related Charges	$77
Total	$27,991
Earnings from Operations	$2,858
Interest and Other, Net	-$91
Earnings before Taxes	$2,767
Provision for Taxes	$567
Net Earnings	$2,200
Non-GAAP Adj.	$604
Non-GAAP Adj. for Taxes	-$171
Non-GAAP Net Earnings	$2,633
Diluted EPS	$1.09

Once again, I find it very surprising that high-paid Wall Street analysts can be so inaccurate at predicting earnings.  Since the creation of this blog, I have been more accurate 71% of the time!  With the information that I freely and regularly provide, readers are better able to make informed trades. 

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Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.