HP profit plunges-----hit the bottom? - By: karanzy

HP profit plunges-----hit the bottom?

I started the week with a column about IBM (IBM, Fortune 500), so it's only fitting that I end the week with a piece about a company I like to call IBM Lite. Or "Little Blue," if you will.Hewlett Packard had a miserable autumn. As winter approaches, new CEO Meg Whitman hopes the bulbs the company is now planting will help the tech giant sprout new, lasting growth in the coming months and years. But on the eve of a key earnings report, shares of HP have made a stunning comeback.

In its first earnings report since Whitman took over as CEO, HP on Monday slashed its business outlook and redefined its strategy once again.Hewlett-Packard (HPQ, Fortune 500), has tried (so far in vain) to replicate the magical mix of services, software and servers that has made Big Blue attractive to the likes of Warren Buffett.Shares are up an astonishing 32% since hitting a 52-week low in late September --- the day after HP said it was hiring Whitman.

The hope: By giving investors a baseline for growth and clarity about its business plan, HP can reboot investors' prospects for the company, put the past behind it and look to a brighter future.HP will announce its fiscal fourth-quarter results after the closing bell Monday. It will be the first earnings release since Meg Whitman took over as CEO following the firing of Leo Apotheker. Analysts are forecasting a drop in sales and profits from a year ago.

"It's Meg Whitman's job to reset and lower expectations going forward," said Jeff Kagan, an independent technology analyst. "She wants expectations to be at their lowest possible; VGP-BPS20/S way any good news will look terrific."HP rose 4% alone on Friday after Sterne, Agee and Leach analyst Shaw Wu upgraded the stock. In his report, Wu wrote that shares have been oversold and that there is less of a cloud hanging over the company now that Whitman has reversed Apotheker's decision to spin-off the firm's PC business.

For the current quarter, the company said it expects to earn between 83 cents and 86 cents a share, excluding one-time charges. For the full year, HP believes VGP-BPS15 will earn at least $4 per share without one-time items. Along those lines, several analysts said they are actually hoping that Whitman lowers earnings and sales guidance for next year. People are clamoring for the company to "reset" expectations, since nobody believes that HP can meet current forecasts for next year.

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