HP Results May Indicate Health of PC Industry

Dell Inc.’s weak near-term outlook raises concerns over whether recent growth in the computer industry may be slowing. Could rival Hewlett-Packard Co. be the next shoe to drop?

HP, the world’s No. 2 personal computer maker, after Dell, is set to report its quarterly results Tuesday. Analysts expect profit to increase more than 25%, excluding charges for job cuts, and sales to rise about 8%.

Investors will scour the results to determine whether Dell’s sales shortfall reported Thursday was because of its own missteps in the consumer PC market or was the latest symptom of a broader slowdown.

“If HP comes out normal to better than average, then it’s not the market that’s the problem,” said Roger Kay, an analyst at Endpoint Technologies, based near Boston.

Dell blamed a confused consumer pricing strategy as the main factor in a $300-million sales shortfall. But analysts are worried that Dell’s slowing growth rate may reflect the difficulty that even the PC market leader has in turning a profit on low-priced computers for consumers.

“We believe lower guidance from Dell, Lexmark and Cisco this [quarter] indicates slower growth in PCs, pricing pressure in printers and slower revenue growth in the IT industry,” Deutsche Bank analyst Chris Whitmore said.

If there is a broader slowdown in consumer PCs, analysts said, it is likely to show up more strongly in HP’s PC business because of its larger presence in that market.