A conference call with analysts concluded just a little while ago. On it, CEO Meg Whitman and CFO Cathie Lesjak reiterated that the turnaround roadmap they outlined at a meeting last year is still going about as expected, and that it is and will remain a multi-year plan. They’ve focused a lot of energy on paying down HP’s debt and improving its operations while making the investments to inject new life into its products lines.

There were also questions about HP’s decision to avoid fighting Dell in the PC business over pricing. Dell has recently said it was getting aggressive in order to take share, while HP has apparently decided to hold on to its profit margins at the expense of sales volume.

It will also be worth listening for hints of and adjustments in the strategy and timing of the turnaround plan put in place by CEO Meg Whitman and outlined at last year’s analyst’s meeting.

Also, HP earlier today released a video with Whitman summarizing the highlights of the quarter’s results.

Here’s a partial transcript of the conference call.

2:06 pm: Joining the conference call in progress. Meg Whitman is speaking. She just said that Europe will continue to be challenging and that China is starting to slow down.

Meg says revenue run-off in Enterprise Services will be slower than expected and will affect overall revenue in 2014.

In the Enterprise Group: Converged infrastructure is the future. Also, the two server groups are being merged into one. Project Moonshot lost during the quarter, but it will “take time to ramp.” But she’s confident that it will work to HP’s advantage without cannibalizing the existing server business.

In networking, HP is a strong number two after Cisco Systems, and its switching revenue is as much as the next five competitors combined, she says.

In software, Autonomy is stabilizing, and Vertica is looking good. The business is “well positioned.” Autonomy landed All Nippon Airways as a customer.

Now she’s speaking about areas where HP’s performance needs to improve. PCs is an area where it needs to fight harder. In mainstream servers, HP suffered from the conditions of the market and was tripped up “by our own execution.”

In PCs, “We stepped away from many deals to protect our bottom line.”

One key difference between the first half of this year and the first half of last year was that the PC industry roared back to life after hard drive supplies were disrupted by the flooding in Thailand.

2:16 pm: Whitman: “Overall our turnaround made progress in the second quarter.”

Now CFO Cathie Lesjak is speaking, and she’s running through the numbers again.

“IT spending softened and the macro-environment clearly did not improve.”

Revenue in most geographic regions was all down.

Software was down some as the industry is shifting to SAAS, Lesjak says.

2:29 pm: Revenue was down in financial services.

Lesjak is now talking about capital allocation and the balance sheet: We delivered more than $5 billion in the first half of the year, which is ahead of our previous guidance. But we do not expect this pace to continue.

Outlook: We remain confident in our ability to manage our cost structure. We are still on track to achieve the savings we’ve planned, but some business units are using these savings.

Moonshot launch was very successful, but we are not pleased with performance of x86 server sales. Printing continues to perform well.

Generally Lesjak expects lower restructuring expenses. “We now expect 2013 free cash flow to be about $7.5 billion.”

2:35 pm: Now time for Q&A. First question is from Katy Huberty of Morgan Stanley. Do you still think you can get to revenue neutral in services?

Whitman: We are rebuilding ourselves amid some of the most profound changes to hit the technology industry in a generation. The slower run-off in revenue will hurt us, but if 3Par and other business units perform as we expect, we expect to grow in 2014, but there will still be headwinds.

Whitman talked about some options for capital allocations. She says it’s mostly going to be “returns based,” meaning a bias toward share buybacks and dividends, and not M&A activity.

Question from J.P. Morgan. Again about services. What is your confidence in the planned services leakage events happening in 2014? Can you still unwind these planned attrition events? Basically he’s asking if some ineffective service contracts will get fixed.

Whitman: There is some predictability coming that was not there in 2012. “The control of this business is feeling better than it did before.”

Whitman: “We are fixing a lot of the problems that are keeping HP from being great. … This takes time. This is an enormous organization.”

Question from Sanford Bernstein: Could you clarify your plan for balancing profitability vs. growth? What is the near to medium term focus on share or profitability?

Whitman: We’re here to set this company up for the long term. In ISS (industry standard servers) we did walk away from some deals that weren’t profitable. In terms of Technology Services, one big headwind was the attach rate of support to sales of Business Critical Services (BCS, a.k.a. the Itanium server business).

Lesjak: We may well be more aggressive in pricing on an industry standard server if we’re getting attached to TS. We’ll take a lower margin based on the complete picture, and the long-term outlook on the account.

Question from Shannon Cross. More color on currency effects. Also pricing on the printer front from the Japanese companies.

Lesjak: Currency is about a point to revenue. It had been two points. “HP is exposed to a whole basket of currencies, and we have different hedging strategies.”

2:49 pm: Lesjak: We think our cost savings in the second half are creating a war chest for our Japanese competitors.

Whitman: We’re going to use that opportunity to fight back. Our competitors are more cost competitive because of what has happened to the yen.

Whitman: “The days of ever-escalating IT budgets in government are over.”

3:03 pm: That’s it. Thanks for tuning in.

Reserving judgment, two analysts wondered in notes to clients today if even the most optimistic outcome for Moonshot is enough to get HP on track.

Moonshot is a “step in the right direction,” wrote Shaw Wu of Sterne Agee, but he wondered if large Web companies could be persuaded to buy from HP rather than have their own custom servers built for them. “But we are not sure if big customers including Amazon, Google, Facebook, and Twitter would switch from their current model where they procure customized server and storage components from Quanta and Compal.”

And even if successful, Moonshot might not have a big enough impact to nudge HP sales upward, Wu wrote, noting that servers account for roughly 25 percent of sales, versus PCs and printers, both in decline, which combined account for about half. “We believe the company’s turnaround remains tough as it remains to be seen whether its enterprise efforts are enough to offset continued challenges in its PC, printer, and services businesses,” he wrote.

It’s also going to take a while for revenue from Moonshot sales to start showing up in HP’s results, says Brian Marshall of ISI. “While we do not anticipate meaningful revenue from Moonshot in the next few quarters, we see it as a positive step towards maintaining HPQ’s number one share position in servers longer-term.”

Not all voices were so reserved. Patrick Moorhead, an analyst with Moor Insights and Strategy who was on stage with HP execs at the launch today, said the most interesting thing about the Moonshot line is not the fact that it uses less energy or takes up less space than conventional servers, but that it works with all sorts of different chips to attack the computing job at hand. Yes, it supports conventional CPU chips like Intel’s Atom and ARM-based server chips like those from Calxeda, but also GPU chips from Nvidia; digital signal processor chips, like those made by Texas Instruments; and field-programmable gate arrays, the software-defined chips turned out by companies like Altera and Xilinx. That, he says, gives it “the potential to change the game in scale-out data centers.”

Today we heard from another analyst following SAP who says quite the opposite. Adam Wood, an analyst with Morgan Stanley, issued a short note to clients critiquing Goldmacher’s findings and urging them to “be aware of headline risk.”

Wood said you can do the same kind of analysis Goldmacher did on any company and come to a similar conclusion. “What he’s saying is that companies have leeway in how they report product growth, so that if you exclude stuff that has been growing very fast at SAP like HANA and Mobile then the rest won’t be growing as fast,” Wood wrote. “If SAP’s overall growth rate was poor it might be useful. But SAP’s overall growth rate is good, [about] 10 percent, and much better than its main peer.”

Goldmacher’s main contention is that SAP has been using aggressive discounts in apps and business intelligence products while holding the pricing line on database and mobile products. The cumulative effect is to make the undiscounted stuff look like it’s growing well on a revenue basis relative to the discounted stuff, which may be growing better.

Wood doesn’t think this is going on, though in at least one sentence he seems to agree that it’s possible SAP is doing exactly what Goldmacher accuses it of: “Anecdotally we don’t think SAP discounts HANA but may discount other products if they take HANA, so they want that business to grow. [There's] nothing unusual or untoward about that,” he wrote. However SAP has said that more than half of its deals for HANA products have been for standalone sales, and not for HANA when packaged with other things.

Take out HANA — SAP’s database appliance product — and mobile, Goldmacher argued, and you find that other products are growing at only 2 percent annually, much more slowly than the industry average for business software.

Wood calls Goldmacher’s note a “poor piece of analysis where the only outcome could be that SAP decides to stop disclosing as much in future in line with their peers, which would be a shame.”

It’s no surprise SAP is taking a little flack for this. SAP has been making noise about HANA’s growth for a while. Co-CEO Bill McDermott called it the “the fastest growing software product in the history of the world” in an interview with AllThingsD earlier this year. And since the world has a sense of irony, McDermott’s enthusiastic pronouncement came only days before SAP sales came in short of expectations in a January quarterly earnings report.

For its part, SAP says it has been consistent in its pricing of HANA and has stuck to its no-discount policy, and that there has been no change to how it reports results.

Fast and loose with the numbers or not, American Depository Receipts of SAP have fallen a tad. Having closed at $80.79 on April 2, they’ve fallen by more than 1.5 percent and closed today at $79.56.

In a research note to clients today, Shope wrote that “sentiment has moved ahead of reality” on HP shares, which before today had risen by more than 110 percent from a mid-December low of $11.35, to close Monday at $23.84. Today, the shares are down by more than 5.2 percent, and hit $22.09 as of 11:10 am ET.

Shope’s statement is the inverse of what HP CEO Meg Whitman has been saying about the state of the company in recent public comments. “The narrative lags the reality,” is a phrase she’s used often in public comments, such as in an interview at The Wall Street Journal’s CIO Network conference earlier this year. The point was to argue that shareholder sentiment had yet to catch up with an improvement in HP’s fortunes, and it was bolstered somewhat by HP’s first-quarter results.

Shope argued that weak PC sales will continue to drag on any improvements that HP sees in other lines of its business, including server sales, as well as operational improvements brought about by HP’s numerous restructuring moves. He took his price target down to $16, and rated the shares a “sell.”

In a sign of the two companies’ changing reputations, Apple Inc. and Facebook Inc. are seeing the difference in the percentage of analysts recommending their stocks narrow, according to Thomson Reuters data. Just a month ago, the percentage of analysts rating each at “buy” differed by about 17 points: 84 percent of analysts recommended Apple and 67 percent recommended Facebook. Three months ago, that distance was 25 percentage points. Now, 71 percent of analysts recommend Facebook and 77 percent recommend Apple.

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In afternoon trading, shares were up almost $10, touching $284. A year ago, the stock was sliding toward its 52-week low of $172.

Amazon usually grows at twice the rate of the overall e-commerce market during the fourth quarter. The last three months of 2012 should be no exception.

According to comScore’s final tally for the November-December shopping season, online spending in the U.S. totaled $42.3 billion, which was a 14 percent increase over 2011, but fell short of its expectations. Ahead of the Christmas holiday, comScore was anticipating a 16 percent jump in spending.

So, if it follows form, Amazon’s year-over-year growth should end up around 30 percent.

Amazon is forecasting net sales between $20.25 billion and $22.75 billion, representing a jump of 16 percent to 31 percent.

Youssef Squali, an analyst with Cantor Fitzgerald, wrote in a note to investors today that he is expecting Amazon to report revenue of $22.05 billion, up 27 percent. The consensus by analysts is a little more bullish, at $22.3 billion.

The positive forecasts are expected in part because of the performance by others, most notably eBay and Google, which already reported fourth-quarter earnings. EBay beat analysts’ expectations by a penny, boosted by strong sales from its mobile and marketplaces division (and it, too, was trading at a 52-week high today, with a share price above $56, up more than 2 percent). Likewise, Google’s cost-per-click business increased 2 percent compared to the prior quarter, reversing a long period of declines, partly because of a strong performance by its new Shopping group.

Interestingly, halfway through the month of December, a monster quarter by Amazon was not a done deal.

There were a few signs that sales had been soft due to one concern: Procrastination. As Amazon’s base of Prime users grows, customers are becoming more comfortable delaying purchases, since they know they can get free two-day shipping on qualifying items. Coupled with Amazon’s reputation for on-time delivery, customers were able to wait until Dec. 21 in order to get packages delivered by Christmas Eve.

Another closely watched metric for Amazon will be its profit margins.

Jeff Bezos, the company’s founder and CEO, has been particularly outspoken recently about sacrificing margins for the benefit of generating more free cash flow.

Cantor Fitzgerald’s Squali is anticipating fourth-quarter operating margins of 1.3 percent, but cautions that “we have little visibility into this metric.” Amazon spends a lot of money on building new distribution centers, offering price promotions and free shipping. It is also investing heavily in cloud computing, packaging free video streaming with Amazon Prime, and its hardware division, including Kindle.

Due to those investments, operating margins may be very low.

To that end, Squali says that any commentary by Amazon’s tight-lipped management team on Tuesday will be key for the stock’s performance going forward.

On the whole, analysts are expecting Amazon to generate a profit of 29 cents a share. Amazon left itself a lot of room with its earlier guidance, saying results could be anywhere from an operating loss of $490 million to an operating profit of $310 million, compared with an operating profit of $260 million in the year-ago period.

Tune in after the bell on Tuesday for live coverage of Amazon’s results.

Shares of the social giant’s stock jumped by more than 8 percent on Monday on news of multiple analyst upgrades. Facebook closed at nearly $26 per share, the highest price the stock has seen since the summer.

Carlos Kirjner, a Bernstein Research analyst, gave the most resounding support of Facebook’s stock over the next two years, upgrading the stock to “outperform” from his previous “market perform” rating (as my colleague Peter Kafka noted earlier).

“Facebook probably can increase the number of ad impressions per user per day,” Kirjner said, “with limited chance of seeing material deterioration in user experience.”

It’s especially surprising given that Kirjner, as The Wall Street Journal earlier pointed out, has been bearish on Facebook since its early days on the Nasdaq.

Indeed, many Wall Street analysts are changing their tunes as of late. The outlook on Facebook’s mobile advertising prospects — once considered the most egregious deficiency in Facebook’s overall monetization strategy — is faring much better.

Rich Greenfield, an analyst with BTIG, raised his price target two dollars on Monday, to $36. Greenfield’s main beef with Facebook mobile ads in the past was that they weren’t nearly as relevant as they should be. The sudden optimism stems from Facebook’s uptick in inserting more mobile ads, which he expects will boost short-term revenue throughout Q4 (though that may prove problematic in the long term).

Other promising reasons for the positive outlook include Facebook Gifts, the company’s push into e-commerce, as well as the up-and-coming Facebook Exchange ad-targeting program.

Facebook shouldn’t break out the eggnog-flavored champagne quite yet. The company’s shares are still down 12 points from the debut share price of $38 in May, and have fluctuated (mostly downward) quite a bit since.

But it’s probably a nice change of pace from hearing the Street’s bearish prospects over the last year.

Wall Street analysts, having held back their approval for several quarters, all acted like teenagers at the last pool party of the summer, and jumped in with a batch of upgrades.

Shaw Wu of Sterne Agee raised his estimate on Cisco’s sales to $48.3 billion in fiscal 2013, which is $200 million higher than the Street’s consensus. He also expects Cisco to report a per-share profit of $1.95 next year. He left his $23 price target unchanged. “We continue to believe Cisco is an underappreciated turnaround story similar to what we have seen with Apple, IBM, and EMC in the past,” he wrote.

Sanjiv Wadhwani of Stifel Nicolaus had a similar call. He boosted his fiscal 2013 revenue estimate to $48.9 billion, and his EPS call to $1.92 per share, up from $1.86 previously, and said he was impressed with Cisco’s relatively strong enterprise sales. “While too early to call a trend, the improvement could be a signal that spending is picking up despite the uncertain macro. We characterize the tone as markedly better versus three months ago,” he wrote.

Other analysts upgrading Cisco shares include Troy Jensen at Piper Jaffray, who raised his price target to $23 from $22; Mark Sue at RBC Capital, who boosted his price target to $19 from $17; Drake Johnstone and Davenport & Co., who upgraded the shares to “buy,” with a price target of $24; and Jason Noland at Robert W. Baird & Co., who raised his target to $21 from $19.

If there was a grump in the room, it had to be Brian Marshall at ISI. He maintained his “neutral” rating on Cisco shares. “While Cisco surpassed a low bar and reported solid metrics in a few areas … overall trends are still deteriorating in our view,” he wrote. Referring to Cisco’s 75 percent boost of its quarterly dividend, and a promise to commit 50 percent of free cash flow to dividends and share buybacks, Marshall wrote: “We believe Cisco’s focus on its capital allocation and dividend policy is a sign of its maturation and limited growth opportunities.”

The good news is that before accounting for those huge charges, HP’s business is doing slightly better than expected. It raised its earnings outlook slightly for the quarter ended in July, saying it expects to earn about $1 per share, up from a range of 94 cents to 97 cents previously.

The shares rallied, gaining more than 2 percent and closing at $19.41. The announcement also gave some analysts hope that the slowly unfolding turnaround at Hewlett-Packard under Meg Whitman is entering a new phase: The difficult part where the charges are big and the layoffs and voluntary retirements are plentiful.

Analysts Amit Daryanani of RBC Capital Markets and Shaw Wu of Sterne Agee both saw the move as a positive one. Daryani maintained an outperform rating, the equivalent of a “buy” with a $33 price target, which would amount to a 70 percent boost over yesterday’s closing price. But for now he says the shares will stay in a “penalty box” until HP is done taking restructuring and impairment charges.

Wu at Sterne Agee was surprised by the upward revision in HP’s outlook: “This raise is surprising given the consensus negative view and expectations of a potential miss,” he wrote. “We view restructuring as a positive as the company is taking steps to clean up its balance sheet and reignite growth.”

While HP didn’t say anything about its revenue outlook for the quarter, Wu thinks it will be better than expected. The consensus view had HP expected to report sales of $30.3 billion this quarter. Wu kicked his estimate up a notch and says he sees HP coming in at $30.5 billion. “While the company did not provide details, we believe the EPS beat is based on better than expected revenue, as well as tight cost controls,” he wrote. His rating: “Buy” with a price target of $33.

In what is becoming a routine move, the company said today during its second-quarter earnings release that it is now expecting eBay and PayPal mobile to each transact $10 billion in volume this year.

“That’s more than double 2011,” said eBay’s CEO John Donahoe, who called it “a staggering surge” in mobile commerce that did not exist just a few years ago.

As recently as January, eBay was predicting that mobile shopping — either through its apps or the browser on either a phone or tablet — would hit $8 billion in mobile gross merchandise volume in 2012. Likewise, PayPal was expected to hit another $7 billion in mobile total payment volume.

Last year’s numbers were similarly revised multiple times before the end of the year, when eBay’s final mobile tally stood at $5 billion and PayPal’s totaled $4 billion.

“The line is blurring between online and offline, and that behavior is happening because of the investments we have made in mobile,” he said.

As part of the company’s second-quarter conference call, analysts peppered Donahoe with questions about whether these sales were incremental to the company’s traditional business. However, he dismissed those fears; if someone wants to buy a car part while under the hood or while walking down the street, they better let them.

“We believe it is helping our growth rate and helping us be the leader in mobile commerce and payments,” Donahoe added.

It’s hard to say which retailer is a leader in mobile. Others, such as Amazon, have been reluctant to disclose how much traffic is coming from mobile devices. Donahoe said there are obvious leaders, like Amazon and eBay, but beyond that he questions if other retailers are doing significant revenue on mobile.

“If you think of it as an app-based world, we aren’t going to carry around a Neiman Marcus app and a Walmart app and a Best Buy app. By being a marketplace, it’s a single app that gives you access to a lot of things. That’s why we are getting viral traction on it.”

Just yesterday, eBay announced it acquired Card.io for an undisclosed price. The year-old company allows users to skip the tedious process of entering their credit number into various fields at check-out by taking a picture of the card. With that technology under its belt, Donahoe said you can envision a world where you take a snapshot of a credit card and a driver’s license to create a PayPal account.

“Consumer acquisition leads to user engagement, which leads to merchant ubiquity,” he said.

Other figures released today:

• eBay apps have been downloaded 90 million times, up from 65 million in January.
• People are using the apps to list almost two million devices every week, and a handbag is purchased every 30 seconds.

Of the 18-odd banks involved in the underwriting process, nearly half of them gave Facebook a “buy” rating on Wednesday, the first for these firms since the end of their mandatory 40-day quiet period following the offering.

But one such underwriter, BMO Capital, wasn’t having it. The firm gave Facebook an “underperform” rating with a price target of $25, nearly a 35 percent reduction from the stock’s initial $38 IPO price. It stands alone as the most negative rating against a backdrop of cautiously optimistic new estimates.

BMO cites reasons that many — including Facebook in its S-1 filing — have already raised as cause for concern, including a decreased outlook on user growth as the site reaches close to one billion users. There’s also the problem of Facebook’s questionable advertising model, made especially problematic by the migration of active users moving toward mobile devices, a platform yet to be monetized effectively.

They’re a valid set of concerns, and ones that Facebook seems to be taking seriously. The company has been on an acquisition spree for mobile applications and talent, potentially aiming to bolster its small but promising e-commerce system with the recent acquisition of Karma.

Facebook’s stock was down 2.63 percent at the close of business on Wednesday at $32.23, though it’s still up seven points from its all-time low of $25.52.

On Wednesday, the door opened for research analysts at banks that worked on Facebook’s initial public offering to publish their views on the social-network company’s shares. Large Wall Street firms are barred for a 40-day period after an IPO from putting out analyst reports on stocks they underwrite. Smaller banks involved in an IPO aren’t legally barred but typically agree to adhere to the delay.

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Word of the dividend came a day ahead of today’s meeting with analysts in Austin, during which CEO Michael Dell said he plans to make $2 billion in cuts over the next three years. Most of the cuts — about $800 million — will come from a simplifying of sales operations. Another $600 million will come from savings in Dell’s supply chain.

Meanwhile, Dell’s evolving strategy of essentially assembling acquisitions into a credible enterprise-focused IT organization will continue apace. Dell’s target is to make data-center products and services grow by more than 40 percent to north of $27 billion by 2016. During that same period, it expects PC sales to grow by only 8 percent to $47 billion.

The problem, wrote the analyst Rob Cihra of Evercore in a note to clients sent out today, is that no matter how you slice it, half of Dell’s business is PCs, and the pressures of profit margins in that business aren’t going away. Despite Dell’s assurances that it can maintain operating margins on PCs at north of 5 percent, Cihra wondered if sagging margins might force Dell to price its machines higher and lose more ground to rivals Hewlett-Packard and Acer. “We are a bit more concerned than management that Dell can continue walking away from aggressive pricing in the name of margin stability,” he wrote. “We see this setting up as Dell’s seventh straight year of market share erosion.”

So what did analysts think of the dividend? Thumbs down. Shaw Wu of Stern Agee, in a note to clients today, worried that paying a dividend would eat into the cash that Dell needs to keep buying companies to help it continue its enterprise-focused shift.

Wu says at least one motivating factor for Dell to initiate a dividend now is that other companies are doing it, so investors expect it, especially after Apple initiated its first dividend in two decades earlier this year. “While the company did not mention this, we believe a key reason for Dell implementing a dividend policy is that it needs to do so to stay competitive,” he wrote. “In our view, the company not only competes with Apple, HP, Cisco Systems, and IBM in the marketplace, it also competes for shareholders.”

It is true that much has been made (including by me) of reported changes made by certain research analysts in their estimates of future performance. Let’s come back to that after we look at the facts on the prospectus.

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Apparently the final reassurance analysts and investors were looking for was that the company is indeed still growing.

Despite taking several measures over the past couple of months in the wake of an awkward fourth-quarter earnings revision, Groupon has not been able to regain investor confidence and has watched its stock price slowly dwindle to half its IPO price of $20 a share.

Today, the company’s stock opened at $14.93 a share before settling at $12.17 at the close, up 3.7 percent.

At least two analysts were bullish on yesterday’s first-quarter results, upgrading Groupon’s stock to a buy.

Sterne Agee upgraded Groupon from neutral to a buy and set a price target of $20. In a note to investors, analysts Arvind Bhatia and Brett Strauser wrote that the strong first quarter “alleviated several concerns,” including Groupon’s ability to have operating leverage. An additional plus, they wrote, is that the stock is trading so far below its IPO price.

Likewise, Mark Mahaney from Citi wrote that “we’ll grab this deal,” and upgraded the stock to a buy with a $22 price target. Four factors drove his decision: 33 percent quarter-over-quarter revenue growth in North America, international margins turning positive for the first time, marketing spending declining for the fourth quarter in a row and the very low stock price.

As my colleague Ina Fried reported yesterday, Groupon’s first-quarter revenues topped the company’s prior forecast as well as analyst expectations, totaling $559.3 million during the period, compared with $295.5 million a year ago. Operating income was $39.6 million, including an expense of $28 million related to non-cash stock-based compensation.

The strong results helped overshadow the company’s previous follies, which included the financial revision in the fourth quarter due to higher than expected holiday returns and the disclosure that auditors had determined it had a material weakness in its financial processes.

In a conference call with analysts, Groupon’s CFO Jason Child, who is under fire over the gaffes, said: “There’s some specific tasks that we have implemented and are going to implement. We’ve certainly added some people, and have some more work there. We have 48 countries and so we do have accounting personnel and controllers in every single country.”

In addition, Groupon has taken several precautions over the past couple of months to ensure the mishaps won’t happen again.

For example, Groupon has hired Kal Raman to build out the company’s internal controls and processes as the SVP of Americas. He previously held executive roles at Amazon, eBay and Drugstore.com. Groupon also nominated two new members with accounting prowess to the board and has been working on its financial controls.

Child said that since being tripped by holiday returns, the company has implemented a more granular statistical model that maps returns on a weekly basis.

“From a process standpoint we are in good shape, and there’s some technology that is especially helpful with a company like ours,” he said. “We made a lot of progress this quarter, and will make a lot of progress next quarter, and hopefully in the next quarter or two, we’ve done all the steps necessary.”

Groupon’s auditors won’t review whether the company has rectified its financial processes until the end of the year, so even if the company moves faster the label will remain.

In a recent letter to shareholders, Groupon’s CEO Andrew Mason said he did not have regrets on moving too fast.

“Although there are risks in moving too fast, companies often don’t survive long enough to apologize for moving too slow,” Mason writes. “Perhaps more importantly, by moving quickly, we reached a scale that has helped us solidify our market leadership, and accumulated data that is enabling our future and helping us continuously improve the experience of our customers.”

Stern Agee analyst Arvind Bhatia initiated coverage on Facebook shares on Monday morning with a “buy” rating, setting a price target at $46 for the next 12 months. Bhatia’s take comes on the heels of a similar, though informal, coverage note issued to media last Friday from Wedbush Securities, where the firm targeted Facebook’s share price at $44.

Both targets are set squarely above Facebook’s estimated share price range of $28 to $35, and would value the company at close to $100 billion.

Bhatia’s report cites Facebook’s upheaval of the online ad industry, a harbinger of change similar to the likes of Google almost eight years previous. Taking into account Facebook’s massive 900 million user reach, steadily growing average revenue per user numbers and the company’s high — though as yet untested — hopes for mobile monetization, Bhatia’s outlook on the company is bullish.

Though some say it’s not just about ads. “If you look further into the future, I believe they want to compete directly with the likes of Google, Amazon, Apple, companies with diverse product portfolios,” Gartner Research VP Brian Blau told AllThingsD in an interview. “They have the users, and they’re doing well with advertising, but they just don’t have all the products that its other competitors do. At least, not yet.”

The fervor for Facebook’s stock is at an all-time high in light of the company kicking off its roadshow to potential investors this week, with Zuckerberg and CFO David Ebersman making pitches in person.

Though it doesn’t seem like investors need much convincing; the roadshow festivities began midday on Monday at the Sheraton Hotel in Manhattan, with more than 500 investors and analysts flooding in to get a peek at Zuck’s performance. An onlooker said the CEO looked “likeable and affable,” according to an article in The Wall Street Journal.

And no, there was no half-windsor around Zuck’s neck — he made the pitch in his trademark hoodie.

Well, today we heard from another bank, and its opinions about Intel’s Romley chip and what it means for data center spending couldn’t be more different. Chris Whitmore, an analyst with Deutsche Bank Market Research, published a note to clients today, arguing that Romley will indeed spur a new round of spending in corporate data centers, and that it will have an equally strong secondary effect on the fortunes of enterprise storage companies, specifically EMC and NetApp.

One of the things that Romley will encourage, Whitmore writes, is a growth in the density of virtual machines running in each server. (Remember that, more often than not, a physical server is virtualized or subdivided into many virtual servers, allowing each machine to act like several machines.) More virtual machines allows you to consolidate your physical machines and add more in the same footprint if you want, which in turn means more computing work getting done overall. Whitmore estimates that, in general, data centers will boost their workloads by 20 to 25 percent by the end of next year.

Roughly 26 percent of Romley chip purchases will be used in these virtualized environments, Whitmore estimates. And that tends to spur demand for storage to support the virtual machines. In fact, the growth of terabytes worth of storage products shipped mirrors closely the unit growth of servers. (See the graphic, below, which I screen-grabbed from the report; click to see it bigger.) In short, it’s good news for NetApp and EMC. Whitmore says both are taking share from other vendors, including IBM, Hewlett-Packard and Dell, with sales growing at north of 20 percent a year — a growth rate that’s higher than that of the overall market, which grew 14 percent last year. He rates shares of both EMC and NetApp a “buy,” with price targets of $35 and $60, respectively.

Great news for EMC and NetApp, but what does it mean for Intel? Whitmore says to expect a mixed bag. Companies wanting to boost their use of virtual machines will be buyers. Companies that aren’t into virtualization so much, maybe not. “We believe our estimate of x86 servers shipped into virtual environments growing from 21 percent in 2011 to 26 percent in 2013 could prove conservative,” Whitmore writes. “As a result, although we expect Romley to have a relatively muted impact on overall server unit demand, we do expect it to drive another leg of virtual machine growth.”

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The EPS number exceeded the expectations of analysts, who had anticipated HP would report per-share earnings of 87 cents. But sales at $30 billion even were light of the $30.7 billion Wall Street had expected.

Sales of PCs fell 15 percent year over year with an operating margin of 5.2 percent. Consumer sales fell by 25 percent and corporate PC sales fell 7 percent, while sales on a unit basis fell 18 percent. HP had faced a tough quarter on many fronts. With the shortage in hard drives caused by the last year’s floods in Thailand sapping overall demand for PCs, sales have been tricky and it showed. Corporate demand was thought to be relatively stable, while consumer demand continues to be slow amid stiff competition from Apple’s iPad and a tough economy overall.

Tony Sacconaghi, an analyst with Bernstein Research, said in a research note to clients issued today that HP, despite being the world’s largest vendor of PCs, appears to have struggled more with the Thailand problem than any other vendor.

On the printer front, HP’s Imaging and Printing Group saw its sales decline by 7 percent with a shockingly low 12.2 percent operating margin, down from 15.4 percent in 2011. HP’s printer unit has significant long-term problems, not the least of which is the fact that people are generally printing less. At first blush, this appears to be a serious blow to a business unit that was once the pride of the company.

Enterprise servers, Storage and Networking saw a 10 percent decline overall. The Business Critical server business — the one involving servers running Intel’s Itanium chip, which is the subject of an HP lawsuit against Oracle — saw its sales decline 27 percent. Networking revenue was flat and everything else was down.

Software was a bright spot, but a small one. Sales were up 30 percent and services grew 108 percent, but again, that’s off a low base and nowhere near large enough to offset the troubles anywhere else.

HP’s guidance for the current quarter is also below the street consensus. HP says it sees earnings of 88 to 91 cents, versus the street forecast of 95 cents. There’s no change to the full-year EPS guidance calling for $4 a share in 2012.

HP shares are down by 19 cents, or less than 1 percent in after-hours trading as of 4:26 pm ET. It’s a mixed bag, so given Dell’s performance yesterday, it seems investors are willing to accept an EPS beat alongside a slight revenue miss.

That’s a quick look at the results. HP’s conference call with analysts begins at 2 pm PT. I’ll be dialed in and liveblogging the blow-by-blow.

Here’s HP’s statement:

HP Reports First Quarter 2012 Results
— First quarter non-GAAP diluted earnings per share of $0.92, down 32% from the prior-year period and above previously provided outlook of $0.83 to $0.86 per share
— First quarter GAAP diluted earnings per share of $0.73, down 38% from the prior-year period and above previously provided outlook of $0.61 to $0.64 per share
— First quarter net revenue of $30.0 billion, down 7% from the prior- year period
— Returned $1.0 billion in cash to shareholders in the form of dividends and share repurchases
PALO ALTO, Calif., Feb. 22, 2012 – HP today announced financial results for its first fiscal quarter ended January 31, 2012. For the quarter, net revenue of $30.0 billion was down 7% from the prior-year period, and down 8% when adjusted for the effects of currency.
GAAP diluted earnings per share (EPS) was $0.73, down 38% from the prior-year period. Non-GAAP diluted EPS was $0.92, down 32% from the prior-year period. First quarter non-GAAP earnings information excludes after-tax costs of $364 million, or $0.19 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
―In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,‖ said Meg Whitman, HP president and chief executive officer. ―We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.‖

Earnings highlights
Information about HP’s use of non-GAAP financial information is provided under ―Use of non-GAAP financial information‖ below.
Trends and regional performance
In the Americas, first quarter revenue was $13.2 billion, down 9% year over year and down 8% when adjusted for the effects of currency. Europe, the Middle East and Africa revenue of $11.7 billion was down 4% year over year and down 5% when adjusted for the effects of currency. Revenue in Asia Pacific was $5.2 billion, representing a 10% decrease year over year and down 12% when adjusted for the effects of currency.
Revenue from outside of the United States in the first quarter accounted for 66% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.1 billion, down 13% from the year-ago period, and representing 10% of total HP revenue.
Revenue in HP’s commercial businesses declined 4% year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 23% year over year.
Business group results
— Personal Systems Group (PSG) revenue declined 15% year over year with a 5.2% operating margin. Commercial client revenue declined 7%, Consumer client revenue declined 25% and Workstations revenue was flat. Total units were down 18%, with a 19% decline in desktop units and an 18% decline in notebook units.
— Services revenue of $8.6 billion grew 1% year over year with a 10.5% operating margin. Technology Services revenue grew 2%, Application and Business Services revenue was flat and IT Outsourcing revenue grew 2% year over year.
— Imaging and Printing Group (IPG) revenue declined 7% year over year with a 12.2% operating margin. Commercial hardware revenue was down 5% year over year with commercial printer units down 10%. Consumer hardware revenue was down 15% year over year with a 15% decline in printer units.
— Enterprise Servers, Storage and Networking (ESSN) revenue declined 10% year over year with an 11.2% operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11%, Business Critical Systems revenue was down 27% and Storage revenue was down 6% year over year.
— Software revenue grew 30% year over year with a 17.1% operating margin, including the results of Autonomy. Software revenue was driven by 12% license growth, 22% support growth and 108% growth in services.
— HP Financial Services revenue grew 15% year over year driven by an 8% increase in net portfolio assets and flat financing volume. The business delivered a 9.6% operating margin.
Asset management
HP generated $1.2 billion in cash flow from operations in the first quarter. Inventory ended the quarter at $7.3 billion, with days of inventory up 3 days year over year to 28 days. Accounts receivable of $15.9 billion was up 2 days year over year to 48 days. Accounts payable ended the quarter at $12.4 billion, down 2 days from the prior- year period at 48 days. HP’s dividend payment of $0.12 per share in the first quarter resulted in cash usage of $244 million. HP also utilized $780 million of cash during the quarter to repurchase approximately 29 million shares of common stock in the open market. HP exited the quarter with $8.2 billion in gross cash.

Outlook
For the second quarter of fiscal 2012, HP estimates non-GAAP diluted EPS to be in the range of $0.88 to $0.91 and GAAP diluted EPS to be in the range of $0.68 to $0.71.
Second quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
There is no change to HP’s previously provided full year fiscal 2012 outlook of non-GAAP diluted EPS of at least $4.00 and GAAP diluted EPS of approximately $3.20.
Full year fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.80 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
As part of its annual financial review process, HP implemented several organizational realignments effective Q1 FY12. To provide improved visibility and comparability, HP has reflected these realignments in prior financial reporting periods on an as-if basis. These realignments resulted in, among other things, the transfer of revenue within and among various financial reporting segments and business units. The changes do not impact HP’s previously reported consolidated net revenue, earnings from operations, net earnings or earnings per share at the company level. To reflect these changes, HP released modified quarterly and annual consolidated condensed statements of earnings, segment financial results and statements of business unit revenue for fiscal 2010 and 2011, which are available on HP’s Investor Relations website at www.hp.com/investor/home.
More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.
HP’s Q1 FY12 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2012Q1webcast.

Cisco’s recent history is peppered with instances of missed quarters that deliver on results but offer poor outlook. After a restructuring that saw the company cut 6,500 jobs, kill its consumer-oriented products, sell off its Mexico-based manufacturing operations to China’s Foxconn and recalibrate its long-term growth expectations with the financial community, the pressure is on Cisco and its CEO John Chambers to show that the changes were not only for the better, but that they’re taking hold.

Cisco is supposedly back in fighting trim. A new ad campaign, coupled with aggressive strategies in new market areas like cloud computing, coupled with a pivot away from unsuccessful consumer products, suggest that the company is back on track. But can the apparent progress made last quarter stick?

Analysts are expecting a profit of 43 cents a share on sales of $11.23 billion. Analyst Sanjiv Wadhwani of Stifel Nicolaus expects the results to come in slightly better than that. Writing in a research note to clients last week, he checked Cisco’s channel and found that sales of switching products, weak in recent quarters, appears on track to better than expected. Router sales appeared stronger versus competitors, specifically Juniper, despite a relatively weak environment for IT spending overall.

Geographically, spending in the U.S. was steady and, surprisingly, so was spending in Europe, except for in southern European countries like Greece and Italy, were the sovereign debt crisis has been so acute.

Weaknesses will be apparent, Wadhwani says, in sales of set-top boxes, suffering, in part, because of the shortage of hard drives as a result of the flooding in Thailand. Gross margins, a key metric of profitability, may be down slightly in part of a large sale of aggressively priced routers to China. One bright spot of note: During the quarter, Cisco announced that its Unified Computing System — its cloud computing hardware offering — has reached 10,000 customers and is, roughly, a $1 billion business.

Wadhwani says he expects Chambers to set a positive tone in his guidance. “As far as orders are concerned, feedback has been generally positive and consequently we expect the company to provide solid guidance for April. We also expect a positive tone from CEO John Chambers with optimism about the U.S. leading the world in an economic recovery.” That would be a nice change from the depressing results announced a year ago.

One highlight, Keirstead writes, appears to be Salesforce’s Service Cloud, the service that companies use to track customer complaints on the Web and social media sites. Meanwhile, the average size of deals is climbing as large companies are buying incrementally more expensive versions of different Salesforce products.

And even though Salesforce missed on billings last quarter, prompting a nasty selloff of its shares the next day, Keirstead is unconvinced that was called for. “While the bear case is rooted in a view that the modest October quarter billings miss was a harbinger of slowing momentum, we just don’t see it,” he wrote. One source told him that Salesforce’s reps pushed the social products like Chatter a little harder to the detriment of other core products.

He expects Salesforce to make up for that billings miss this time around: He looks for unbilled backlog to grow 40 percent to $2.1 billion and for operating cash flow to grow by 20 percent, which is good, but still below the previously forecast range. All things considered, Salesforce, he says, may be undervalued. It’s currently trading at less than six times projected sales in fiscal 2013. He rates it with an “outperform,” and gives it a $150 price target.

The comments follow a less than stellar fourth-quarter performance in which the gigantic e-commerce provider spent nearly as much money as it brought in the door — even during its busiest quarter of the year.

Profits for the quarter fell 58 percent, while annual earnings were cut nearly in half.

Some analysts were hoping that the end of the year would be a low point for margins and that Amazon would start growing in 2012 as it benefited from the steep investments made the prior year.

But that’s not part of the plan.

“We’re incredibly optimistic about the opportunity that we have, and that’s why we have invested the way we have and why we’re continuing to invest in the business,” said Amazon’s CFO Tom Szkutak in a conference call with analysts.

For clarity, Piper Jaffray analyst Charles Munster asked again: “So, your outlook in terms of investment philosophy hasn’t changed versus last quarter going forward?”

“No, no,” Szkutak said. “We are continuing to look as we always do. We learn every week, month and quarter about customer adoption. We are looking at a lot of positive things across the business in terms of adoption, specifically Kindle growth from a device standpoint and content that’s following that.”

Other categories seeing growth, he said, include clothing, consumables, consumer electronics and Amazon Web Services.

“There’s a lot of interesting opportunities that we continue to invest in. So we are pleased with the performance in Q4 and what it means going forward for us.”

Over the past year, Amazon has invested heavily in infrastructure, including 17 fulfillment centers around the globe. At the end of the year, it had 56,200 employees, up 67 percent year over year, with most of the hiring coming in operations and customer service.

It has also invested heavily in the digital content business, including the Kindle.

It’s widely assumed that Amazon is breaking even or taking a slight loss on the sale of each Kindle Fire. It’s also securing expensive partnerships with content companies across music, video and books, and giving some of that content away as part of the $80 Prime membership, which also includes free two-day shipping.

All of those are bets that Amazon is hoping will reap profits over the long term, as customers continue to consume after they purchase an e-reader or tablet or sign up for Prime.

So far, it’s too early to see how the investment is faring, especially when it comes to new categories.

“It’s very, very early,” Szkutak said, “but so far, we like what we see, so that’s why we are continuing down the path of adding more content and making Prime better. … Because we are investing a lot, we are making sure we understand it very well.”

A lot of details, like Kindle sales numbers, are still being kept under wraps, but he promised Amazon will someday share more about how it is doing.

Unfortunately, the market isn’t as patient. In after-hours trading, the stock was down almost 10 percent at one point. During the session, it ended up down, 8.7 percent, or nearly $17 , to close at $177.50 a share.