HP 1st Quarter Earnings: 3 Key Items to Watch

Shares of Hewlett-Packard, the No. 1 computer services company, have gained more than 12 percent this year and nearly 30 percent since new CEO Meg Whitman was installed in September.

HP was at $29.05, down 30 cents, in late trading.

After Wednesday's close, the Palo Alto, Calif.-based giant is scheduled to report first-quarter results. Analysts, guided by extremely conservative guidance from Whitman and CFO Cathie Lezjak, estimate HP will report earnings of 87 cents a share on revenue of $30.07 billion.

A year ago, HP reported net income of $1.17 a share, or $1.36 per share on operations, on revenue of $32.3 billion.

Here are three key things to monitor:

Strength of PC sales. Now that No. 3 supplier Dell has reported tepid results for the same period, HP, with a bigger share, may be in the same boat. All vendors were held back because of shortages in disk drives when supplier factories in Thailand were flooded.

As well, the pace of orders by corporations was slow, in part because they await Microsoft's introduction of Windows 8 in the third quarter, which is expected to stimulate replacements. HP, though, has a major presence in the consumer sector.

How did HP's printers business fare? HP is the global king of the laser printing sector, vastly outselling the competition including Lexmark International, the bankrupt Eastman Kodak and Asian rivals including Canon (which supplies its printer engines), Seiko Epson and others.

Due to the Thai floods and lower-than-expected PC sales, sales of printers are expected to have declined about 9 percent, but HP may well have done better as more sales than expected came from holiday buyers.

In the fourth quarter, the Imaging and Printing division accounted for 19 percent of revenue but nearly 30 percent of overall earnings. HP earns good margins on after-sales of cartridges, inks and supplies.

Guidance on any new strategy. Whitman, 56, a Republican, ended up a surprise HP director only two months after losing the election for Governor of California to Democrat Jerry Brown. Nine months later, she was the surprise CEO after HP fired Leo Apotheker.

Whitman immediately decided not to sell the PC division, something Apotheker had proposed, but then said she and Executive Chairman Ray Lane, 65, a former president of Oracle, would develop a new strategy for the company. HP usually doesn't deliver strategic reviews when It reports results, preferring to conduct analyst briefings annually.

But HP's newest CEO, a former CEO of eBay and No. 938 on the Forbes list of billionaires, may want to do things her way.