HP: The Street Gives Meg Mixed Reviews In First Qtr As CEO

While Hewlett-Packard posted better-than-expected results for the fiscal fourth quarter ended October � the first reporting period with CEO Meg Whitman at the helm � the stock is trading lower on lingering concerns about the lack of top-line growth and the substantial work that still remains to pull off what has become a complex turnaround story. While Whitman lowered the bar on 2012 expectations, as was widely expected, there are some worries that she isn�t going far enough, and that the companies troubles run deep and will not be easy or quick to fix. After briefly trading higher after the company issued its Q4 release yesterday afternoon, the stock dripped steadily lower during the company�s post-report conference call, and has continued to trade in the red this morning.

Here�s a roundup of some of the Street commentary on the stock, the quarter and Meg�s performance as CEO to date:

• Toni Sacconaghi, Bernstein Research: Sacconaghi, who pressed Whitman on the call about the company�s loss of market share in certain segments, raised that question again this morning. �A key question emerging from the results is whether HP�s brand or competitiveness is permanently impaired, or whether we are seeing more ephemeral forces at work,� he writes. .�We note that while HP�s Q4 results were a bit better than expectations, the company fared poorly vs. its principal competitors, growing revenues well below normal seasonality, and appearing to lose share in several key categories.� Added Sacconaghi: �On balance, HP did what most investors expected it to do, which was lower expectations for FY �12, and hopefully set the company up for a positive cycle of news flow going forward. The imperative now is for HP to deliver; in the near-term, barring further changes in Board composition or a share repurchase announcement, we see limited catalysts for outperformance, but believe the company�s risk reward remains very attractive at current levels.� He maintains his Outperform rating on the shares.
• Amit Daryanani, RBC Capital: He keeps his Sector Perform rating, while boosting his target to $32, from $29. �While we see the potential for stock appreciation as the dramatically depressed multiple starts to improve, investors will likely remain on the sidelines until they see a few quarters of better execution and more clarity on the implicit margin expansion built into [the 2012 guidance].�
• Bill Shope, Goldman Sachs:  He remains Neutral on the stock. �While the reduced earnings outlook is a painful but necessary first step, we are encouraged that HP is setting what we view as more realistic earnings targets and that management appears to recognize that further investments will be required across its businesses, not just services. While we believe the guidance substantially reduces downside risk to near-term earnings expectations, execution will still be critical.�
• Kevin Hunt, Auriga USA: He maintains a Buy rating on the stock, but gives Meg mixed reviews. �Stars for good revenue, scrapping the overpriced acquisition strategy, big minus for continuation of non-transparent, non-GAAP accounting and lack of revenue guidance.�
• Rob Cihra, Evercore Partners: He keeps his Underweight rating. �Although good to see new CEO Meg Whitman at least attempt to reset the bar, we nevertheless see revs and EPS eroding rather dramatically into FY12, which combines with an already-weakened balance sheet to make us expect little near-term uplift for the stock, nor any quick fixes.�
• Maynard Um, UBS: Um writes that the lower bar on FY 2012 profits �seems reasonable,� but that a return to sustainable growth will take time. He suggests investors would be better off owning Dell, which he notes has already gone through some of the restructuring that still lies ahead for HP.
• Shaw Wu, Sterne Agee: He keeps his Buy rating, and contends the new guidance could prove conservative. �We believe what is happening is that new leadership under CEO Meg Whitman is aiming to under-promise and over-deliver to rebuild investor confidence.�
• Richard Kugele, Needham: He remains bearish. �The task before HP today is daunting. How do you turn around one of the largest tech hardware companies in the world with a weakened balance sheet and a maligned corporate image all amidst a challenging macro-economic environment? Although the company continues to try its best to articulate its plan to be relevant and regain leadership, as Henry Ford said, �You can�t build a reputation on what you are going to do.� As we continue to see 12-24 months+ of restructuring, weak earnings, and soul searching, we reiterate our Under Perform rating on HP.�

HPQ this morning is down 76 cents, or 2.8%, to $26.10.