HP's Rivals Raise The Bar

The question facing Hewlett Packard is probably not whether it will meet quarterly earnings expectations. The question is how well it will beat estimates, and how quickly it seems to be moving on Chief Executive Mark Hurd's long-term strategic plan.

The Palo Alto, Calif., company is expected to announce earnings Tuesday with revenues of $29.8 billion for the quarter, and earnings per share of $1.05. That is ahead of $27.3 billion in revenues and 86 cents a share in earnings a year ago. Given the recent knockout performance at Cisco Systems , and vows from IBM Chief Exec Sam Palmisano of strong future financial growth, however, HP will surprise if its earnings are not strong.

TheStreet: Hewlett-Packard Is a 'Buy' More Than Ever

Such is the current reality in high tech: IBM, Cisco and HP have become giants almost unto themselves, promising big companies a full range of hardware, software and services to run the biggest corporate computing operations. Oracle and Microsoft have a similar size, with different things on offer, and there are few others besides. The big three all need to show strength, lest one compares poorly to another.

This is particularly so for Hurd's HP, which in the past two years has made major acquisitions, including consulting firm EDS, networking company 3Com , and most recently wireless device maker Palm. EDS is the most fully integrated, and HP should show not just gains in efficiency from relentless cost cutting, but also contract wins. 3Com is not yet in the market with its main routing product under an HP brand, but Tuesday's earnings call may offer a timeline. The Palm deal has not yet closed, but executives may offer further granularity about HP's plans to integrate Palms webOS operating system into future devices.

In addition, HP is said to be in discussions with Google about incorporating Google's Android operating system into a slate or tablet-style computer later this year. Look for word on that, as well as any discussion of how this might affect HP's relationship with Microsoft.

Hurd is very interested in building up HP's software and services arm, particularly as a means to bring new growth to the printing business. While the sale of printer cartridges has in past years sometimes carried the company's quarterly earnings, more recently that business has been hit by pricing pressure from competitors and refill services.

This may be negated by a pickup in economic activity--printing is directly related to economic growth, and in past quarters sales of cartridges have helped HP plan for forthcoming demand elsewhere.

The global tech giant may also highlight activity in emerging economies like Brazil, China, and India, which were among the highlights of last quarter's earnings. At the time, HP said the performance of these markets was broad, deep and sustainable.

To read more of Quentin Hardy's stories, click here. Contact the writer at qhardy@forbes.com.

See Also:

HP: Palm Is About Future, Not Phones

HP's Mark Hurd Wants It All

HP: A Jewel In Its Crown