HP: Not a bad year, and not changing its plans for '09

Monday night's earnings call with HP wasn't so bad compared to the mess that much of 2008 has proven to be, though even a no-worries report wasn't enough to cheer up the market Tuesday.

Fourth-quarter results for HP were not only within guidance but pretty decent, showing Q4 revenue of $33.6 billion representing 19% year-over-year growth.

The EDS acquisition is complete, which allowed the company to cut 2,300 jobs from its roster and accounted for an eye-catching 99% year-to-year increase in revenue for HP Services. That acquisition occurred on August 26; leaving aside the new guys' help, HPS Services revenue still grew 10% on its own.

And the firm predicts first quarter earnings between 93 and 95 cents/share. Citigroup analysts have even bumped up their estimates, from 93 cents to 94.

There were an assortment of other bright spots, though not much cheer was emanating from the Image and Printing Group, where revenue declined 1%. Consumer hardware revenue was down 21%, with printers not making themselves known as an urgent expenditure these days. But notebook sales, coincidentally, ratcheted up 21%, providing a nice kick for the Personal System Group; desktop revenues declined just 2%.

CEO Mark Hurd sounded confident too, noting that while times are strange, he believes the company can continue to execute on its plans -- and backed it up by not changing HP's guidance for Q1 or full-year 2009. HP's plans include integrating EDS services division into the company and by further spending and personnel cuts, though Hurd says they mean to do so "without losing any muscle." For the full revenue year 2009, Hurd expects revenue between $127.5 billion and $130.0 billion.

So why was the stock price so nervous on Tuesday, jittering down at the close of Tuesday trading to $33.61 (a loss from Monday of 5.85%)? For starters, tech spending still makes investors generally twitchy, even if the company's holding the line so far.

More broadly, exchange rates will continue to cause pain, especially since much of HP's biggest growth comes from emerging countries, with Brazil, Russia, India and China together growing 23% and accounting for 9% of total revenue. Overseas revenues now account for 68% of all HP intake.

The 19% year-over-year growth figure includes EDS revenue, but even without that adjustment, the growth measures 5%, or 2% when you figure for currency. And currency figures too in full-year projections, for which the company expects to take a 5% hit in Q1 and around 6-7% for the full year.