INSTANT VIEW: HP preliminary profit beats Wall St. view

NEW YORK (Reuters) - Hewlett-Packard Co (HPQ.N) said on Tuesday it expects its fiscal fourth-quarter earnings to beat Wall Street forecasts and also predicted a profit for the coming year that topped analysts' estimates.

Shares in the world's largest maker of personal computers surged more than 11 percent as the preliminary earnings helped reassure investors the company may be better positioned than some rivals in an economic slump.

COMMENTARY:

SHEBLY SEYRAFI, ANALYST, CALYON SECURITIES

"It looks like results were better than what people had feared and the guidance was better than people had feared. However, I think the risk is that their forward guidance is too optimistic as PC growth slows down, especially in notebooks. PC visibility is getting worse by the day and what they are seeing right now may not be true in a couple of months.

"So although what they are guiding for fiscal 2009 is positive relative to consensus, it still may be too high once the final numbers come in.

"Short-term forecasts are always subject to a lot of risk and variability, but my sense is the stock goes up today, and over the coming months may exhibit more weakness as it becomes clearer that things are getting weaker."

ASHOK KUMAR, ANALYST, COLLINS STEWART

"Near term there continues to be headwinds in terms of overall PC demand, but where HP and IBM (IBM.N) are more immune is higher exposure to services and solutions as well as a global footprint, which provides them offset to weakening hardware sales.

"The threat of a consumer pullback is real and present. It's unlikely that companies large and small can sidestep the structural weakness on the consumer side. But those with a broader portfolio -- like Hewlett-Packard and IBM -- will be able to weather the storm better than the likes of Dell (DELL.O).

"This week Dell reports and it looks like their numbers should be below Street expectations both for the quarter and the fiscal year since it's a pure hardware company."

BRENT BRACELIN, ANALYST, PACIFIC CREST

"While (their guidance) does imply they are going to grow the 8 to 10 percent year over year, that includes revenues from EDS.

"So if you were to back out the EDS revenue they are guiding to an organic decline of about 5 to 7 percent year to year. So they are expecting their business to decline, which is a reasonable expectation, but clearly it's not as bad as the PC supply chain."

SHANNON CROSS, ANALYST, CROSS RESEARCH

"The HP numbers reflect the fact that HP is gaining market share in an extremely strong competitive position. They've got share gains, combined with very aggressive cost reduction. It's very prudent management of their resources, and that's allowed them to put out numbers that are ahead of the Street even in this economic environment.