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Strong quarter expected from HP

Strong sales, especially in the corporate market, imply ongoing recovery from last year's and last quarter's disappointing results.

Strong sales, especially in the corporate market, should propel Hewlett Packard (HWP) to report improved earnings for the quarter that ended in July and set the stage for continued growth.

The consensus opinion among 23 analysts is that the computing giant will report earnings of approximately 68 cents a share for the company's third fiscal quarter, according to First Call. That's up more than 50 percent over earnings per share of 40 cents for the same quarter a year ago. The estimates range from 63 cents to 75 cents.

Last year, earnings dipped 26 percent because of losses in certain business divisions. And last quarter, earnings came in below expectations.

The financial report will be released at 8 a.m. ET on Monday, August 18.

Estimated per-share earnings for the fiscal year, which ends in October, are at $3.11; HP earned $2.46 in fiscal 1996.

"They've had a great quarter. Unit sales are off the map," commented Roger Kay, senior analyst at International Data Corporation. "Year-by-year unit growth was 37 percent in the U.S. and 48 percent worldwide." As a result of the growth spurt, the company became the No. 5 Microsoft-Intel platform computer vendor in the U.S. and No. 3 worldwide, surpassing Dell globally, he added. IDC's calculations combine unit sales of PC desktops, notebooks, and Microsoft-Intel-based servers. They do not include HP's Unix sales.

No single product or product line accounted for the boost, Kay said, although Vectra sales appeared strong in comparable numbers from a year ago.

The expected rebound from last year's third quarter, and the most recent quarter, will in any event improve HP's appearance and foreshadow future growth.

"Note that HP's quarters are tough calls. HP's overall business has likely gotten better rather than worse relative to last quarter, which came in below expectations," said Kurt King, an analyst with Montgomery Securities in a prepared report. "Easy year-ago comparisons will allow revenue growth acceleration that could continue for two quarters or more."

King estimated that HP would report earnings of 69 cents a share.

Last year's third-quarter results were hurt by losses in HP's disk divisions. Revenue declined 26 percent during that quarter, compared to the same quarter for fiscal 1995. Overall, the company then reported earnings of $425 million on revenues of $9.1 billion.

Last quarter, HP posted earnings of 75 cents a share, which translates to $784 million in earnings off $10.3 billion in sales. Analysts expected earnings closer to 80 cents.