Intel shares have traded lower since last Thursday, when the market research firms IDC and Gartner said they had tracked one of the largest year-on-year declines in sales of personal computers since records have been kept. Intel is the largest supplier of microprocessors to PC manufacturers like Hewlett-Packard, Dell and Apple, and it’s hard to see how much good news it can possibly bring to the table today.

Analysts are expecting Intel to report a profit of 41 cents per share on sales of $12.6 billion, and missing either would be seen as more or less proving that the PC market is in a state of permanent decline. So would a weak outlook for the current quarter, for which analysts currently expect earnings of 40 cents on $12.9 billion in sales.

There are other aspects to Intel’s business. It has a healthy data center business selling chips for use in servers, but out of more than $53 billion in sales last year, $34 billion, or more than 61 percent, was in its “client,” or PC, unit, while the data center group accounted for about $10.7 billion.

In the past, Intel executives have quarreled with the analyst firms, and said it was seeing more promising conditions in emerging markets. Indeed, in prior years there has been a disconnect between the dour pronouncements of Gartner and IDC and the peppier market conditions that Intel would later describe in its financial results in places like Brazil, Indonesia and Russia. In more recent quarters, the differences between their views have narrowed.

Aside from PCs, Intel has some new ideas that it hopes will kick its data center business into a higher gear. And it certainly has higher hopes about selling more chips for use in phones and tablets, but as yet they’re only hopes. It also plans to launch a TV product later this year.

Aside from the numbers, expect some questions — and maybe even some answers, but probably nothing conclusive yet — about the search for a replacement for CEO Paul Otellini. The smart money says the choice will be an internal one (here’s a rundown on the contenders), though there’s a slim chance that Intel’s board might be in the mood to surprise everyone and name an outsider. But don’t bet any money you can’t afford to lose on that.

HP shares are trading lower by more than 2 percent in premarket action in partial response to the downgrade note by Peter Misek of Jeffries and Co. Misek lowered his target price for HP shares to $14 from $17, and maintained his already low estimate on its per-share earnings for fiscal year 2013 of $3.58, which is far below the consensus estimate of $4.22.

He has lots of reasons: For one thing, Misek is worried about HP’s intentions in the tablet and smartphone arena. After failing to capitalize on the acquisition of Palm and shutting down the webOS hardware business after sales of the TouchPad tablet failed to gain traction — and a subsequent $3.3 billion write-off for goodwill and inventory — Whitman has promised to try again with another smartphone. Misek sees that “makes sense strategically,” but it carries with it a lot of risk: “On top of adding costs and working capital burdens to an already stressed balance sheet, there could be additional write-offs.”

Meanwhile, HP already has significant trouble with its bread-and-butter PC business. Overall demand in the PC market is slowing, while Microsoft’s Windows 8 doesn’t yet appear to be much of a catalyst, at least if you look at the slow demand for PC microprocessors from Intel.

On top of that, the transition to a renewed emphasis on higher-value IT hardware and services is sputtering. Documents revealed in the lawsuit with Oracle over the Itanium chip — HP won the first round, but Oracle has promised to appeal — laid bare the fact that HP has long been relying heavily on revenue-derived service-and-support contracts with customers who buy Itanium-based servers. Referring to the Business Critical Server unit that sells the servers, Misek writes that his conversations with its customers don’t bode well for HP: “Our conversations with BCS customers indicate a lack of confidence in the longevity of the product platform. While migration off of BCS is not lightly undertaken, we expect continued weakness in BCS hardware and related Services revenues.”

Then there’s the printer business: Inventories of printer ink have built up because they’re selling more slowly than before. The correction, Misek argues, will take several quarters to resolve. He thinks tablets are cutting into demand for printed pages.

Finally, there’s software: The one still-unfinished bit of messy business left over from the 11-month service of former CEO Léo Apotheker is the $11.7 billion acquisition of the British software firm Autonomy, announced 13 months ago. Misek says he expects HP to write off some of the value of Autonomy. This would follow the massive $8 billion write-off announced Aug. 22, related to the EDS acquisition from 2008. After that first big write-off, HP hinted strongly that more goodwill write-offs are in the offing, probably in Software, Misek says. “After Autonomy’s poor performance the last couple quarters, we think HP will write off half of the $6 billion goodwill from the Autonomy acquisition, which will put further pressure on its debt to equity ratio.”

Which brings us to HP’s debt situation. Misek notes that HP has $1 billion in debt payments due in the fourth quarter of this year, and another $5.5 billion due in fiscal 2013. While not unusually high for HP historically, it doesn’t exactly help the already-strained balance sheet. Investors in debt markets have certainly noticed as credit default swaps on HP bonds experienced a textbook case of “blowing out” over the summer, though in all fairness it wasn’t the only PC maker they worried about.

Misek isn’t the first to place a “sell” rating on HP shares. Chris Whitmore of Deutsche Bank Securities was notable for placing a “sell” on HP in August of 2011, and has remained bearish on the shares since then. The bearish case is strong, indeed, and many investors are working it: Short interest in HP shares — an indication of sentiment that the share will fall further — has increased substantially in the last year.

As markets opened for trading in New York, HP shares fell by 15 cents, or a little less than 1 percent, to $16.96 on the New York Stock Exchange, after closing yesterday at $17.11. If HP shares fall to the $14 price target that Misek has set, it would constitute their lowest price since April of 2003.

The big looming question is whether HP can legitimately turn itself around. Having already set plans to reduce its headcount by 29,000, its restructuring is still getting under way.

There are many betting that Whitman may be in over her head. In a research note issued to clients today, ISI’s Brian Marshall considered — and then rejected — the bearish case against HP. Short interest in HP — a key indicator of market sentiment that a stock’s price is going to fall — has increased substantially in the last year: About 3.7 percent of HP shares were short, as of Sept. 14, up from less than 1.5 percent a year ago. And the short bets have paid off: HP shares closed Tuesday at $16.71, a level they haven’t seen since about 2002.

Marshall summarizes the bearish case thusly: HP is a broken company, and will experience annual revenue declines of about 5 percent forever. With the enterprise value amounting to about 8 times free cash flow, the company is not generatng enough free cash flow to be an attractive investment. Add to that about $20 billion in net debt, and you get a company that has little flexibility to make big acquisitions or invest in new initiatives. Conclusion: HP’s hopes for delivering $4 a share in annual per-share earnings just aren’t tenable.

But Marshall is not a bear himself. In his view, HP should saw itself in half — one part that generates cash, and one that requires cash investments in order to grow. The “growth group,” as Marshall sees it, would combine the Enterprise Servers, Storage and Networking business unit and HP’s IT Services group. The “cash group” is the new Printing and Personal Systems Group, which amounts to about 51 percent of overall sales. Marshall argues that HP Executive Vice President Todd Bradley, who runs the PC and printer group, will be an effective steward of that unit’s contribution to HP’s overall cash flow, allowing the excess to be reinvested in the “growth group,” and to rebuild the balance sheet.

“While we expect HP to continue to post revenue declines of about 5 percent year-on-year for the next 18 months before the company becomes a GDP-like grower, we believe annual earnings power can be maintained at about $4 per share during this transformation period,” Marshall writes.

How will HP maintain its earnings while revenues slide? Reducing headcount further — Marshall sees another 15,000 jobs on top of the 29,000 already announced — plus further reductions in the overall share count. Add to that a further tightening of operating expenses, and HP, he argues, can maintain profits at or near $4 a share through 2017.

The San Francisco company’s shares could be priced as soon as tomorrow night, and start trading Thursday morning. Trulia is offering six million shares at $14 to $16 apiece, which, at the midpoint of that range, would raise $65.8 million in net proceeds to the company. That would also value Trulia at $461 million.

Trulia trails behind sector leader Zillow, which held a very successful IPO last year. Zillow sold shares at $20, and now trades near $43 a share, valuing the company at $1.24 billion, or nearly three times Trulia’s proposed value. Trulia is expected to trade on the New York Stock Exchange under the ticker symbol TRLA.

A third company in the space, Realtor.com, trades publicly under the corporate name of Move, Inc.

Morningstar analyst James Krapfel wrote in a note to investors that he believes Zillow is the better bet over the long term, although, in his opinion, both companies are poised to grow as more consumers and agents shift the house-hunting process online.

“We believe Trulia has a growing network effect that could keep upstart online competitors at bay, but believe Zillow’s larger network effect will allow Zillow to maintain its position as the primary home search marketplace,” Krapfel wrote in the note.

Last week, Zillow sued Trulia, alleging that its Trulia Estimates feature infringes on Zillow’s patent related to estimating the value for homes and properties. Zillow is seeking a permanent injunction against Trulia, damages and attorneys’ fees.

A Trulia spokesperson did not reply to emails seeking comment, which is standard practice during the IPO process.

Trulia leveraged a new provision in the JOBS Act that allowed it to file for a public offering confidentially. It did not disclose any financials until 21 days before its road show, which perhaps has allowed it to fly under the radar, compared to other recent tech IPOs.

In the company’s online road show, Trulia highlighted its mobile strategy, saying that, unlike other recent companies that went public and have struggled, it is benefiting from the smartphone trend.

Trulia co-founder and CEO Pete Flint said mobile works for real estate because customers are often out spending the afternoon looking at open houses. Likewise, real estate agents are mobile professionals, conducting their business wherever they happen to be. Because of that, ads monetize better on mobile than they do on the Web, he said. For example, the company’s average revenue per agent is $167 a month on mobile versus $134 a month on the Web.

In 2011, the company nearly doubled its losses to $6.2 million from $3.8 million a year earlier, at the same time doubling revenue to $38.5 million.

Proceeds from the offering are expected to be used for working capital and general corporate purposes. Current shareholders, including Flint and other executives and directors, expect to sell one million shares in the offering.

Shares of HP fell the most of all the Dow stocks Friday, dropping 82 cents, or more than 4 percent, to $19.46 by 2:15 pm ET. The shares have been scraping along the bottom near a seven-year low for several weeks now. Their lowest point yet came on June 28 when they traded at $19.12.

Also falling today was IBM, shares of which dropped $5.25, or 2.7 percent, to $190.04. It was the lowest that IBM shares had traded at since early June. It was the Dow’s fourth-worst performer.

The primary concern is that the slowdown in hiring indicates that companies feel less confident in the state of the overall economy. HP, which in May said it would cut 27,000 jobs worldwide by the end of 2013, isn’t exactly helping the employment picture. But it’s also heavily exposed to Europe, where currency and sovereign debt concerns have weighed on the economy. HP does about 35 percent of its business there.

Worries about Europe hurt IBM, too, though weighing more heavily was a Thursday report by BMO Capital analyst Keith Bachman, who trimmed his revenue estimate, saying he expects the company to report sales below the Street consensus. IBM’s main weakness, Bachman argues, will be an unfavorable foreign exchange rate that reduces revenue by about 3 percent.

RIM was at that point at the zenith of its power. Its share price earlier that summer had hit a historic peak of $144.56 — or about 19 times the price it was trading at today — that it would never see again. Apple’s iPhone had been on the market for a little more than a year, and Google’s Android was barely on the scene. RIM’s co-CEOs, Jim Balsillie and Mike Lazaridis, both of whom I interviewed, seemed in utter denial to the threat the iPhone and Android so clearly represented, even then.

With the shares trading at $7.39 as of the close of market today, the devastating slide in RIM’s share price has done incredible damage to the personal fortunes of the two founders: As of April, Lazaridis and Balsillie together still owned nearly 11 percent of the outstanding shares of RIM. As of today’s closing share price, the paper fortunes of RIM’s two founders, once about $4 billion each, has declined to $219.2 million for Lazaridis and $198.8 million for Balsillie, according to Canadian regulatory filings.

So it goes. RIM’s survival as a going concern is now officially in doubt. Investors now value the company as being worth less than $4 billion, and of that more than half is its $2.2 billion in cash. With operating expenses at their current level running at about $307 million per month, RIM has enough cash on hand to fund operations for another seven months or so.

The company will be firing people and restructuring its operations to lower those costs and buy time. But time is not on its side. Its options are dwindling, and it will either end up in the hands of another company, be chopped up into pieces in a bankruptcy proceeding, or cease to exist.

But time is on the side of the two nonprofit foundations that the two RIM co-founders started when they were at the height of their wealth. In fact, there’s a pretty good chance that they will outlive the company that generated the wealth that funded their creation.

By far the most well-known nonprofit linked to RIM is the Perimeter Institute for Theoretical Physics, an institution founded in 1999 primarily with $170 million in donations from Lazaridis’s personal fortune. Its mission is to provide a place where some of the world’s smartest people come together to try to unlock the secrets of the nature of the universe.

I toured its impressive facility (pictured) in 2008, and while I was in Waterloo, I had the opportunity to attend a lecture by Brian Greene, a professor of mathematics and physics at Columbia University. He’s the author of “The Elegant Universe,” which was adapted into a PBS TV series of the same name. What surprised me most was that on a hot August evening, there wasn’t a single open seat at the local high school’s stuffy auditorium. (I wrote about the lecture, and published an audio recording of it on my rarely-updated personal blog.)

Greene is not the only superstar lecturer who has given talks in Waterloo under the auspices of the Perimeter Institute. In 2008, Stephen Hawking was named the institute’s distinguished research chair, and has regularly visited to give lectures like this one in 2010.

In short, the Perimeter Institute has, in its brief life, become a heavy hitter in the field of theoretical physics. It’s also living well within its means. According to its annual report for the 2011 fiscal year, the institute exited the year with nearly $272 million on its books, and reported $18.6 million in operating expenses, more than half of which was spent on research.

Aside from the gift from Lazaridis, the institute has secured $50 million in grants from the federal government of Canada through 2017, and another $50 million from the provincial government of Ontario through 2021. It raised an additional $5 million in private donations. Its spokesman, John Matlock, told me that its fortunes aren’t directly linked with those of its founding benefactor: “Perimeter was founded through the vision and personal philanthropy of Mike Lazaridis, and the institute continues to grow its research, training and outreach activities via a successful public-private partnership involving a wide variety of members who equally value the importance of theoretical physics,” he told me via email.

It’s a similar situation at the Centre for International Governance Innovation (CIGI), a global policy think tank founded by Balsillie in 2001. Its mission is to suss out through research the complicated questions about how world governments can do their jobs better, and it aims to have some influence over actual policies that get enacted. One bit of credit it claims is the research that led to the creation of the G20 group of major economies.

It appears to be similarly well-funded; it exited the year with about $203 million in its endowment, according its 2011 annual report, and reported operating expenses of $38.4 million. CIGI began with a combined $30 million gift from Balsillie, who gave $20 million; and Lazaridis, who gave $10 million. Another $30 million in matching funds came from Canada’s Department of Foreign Affairs and International Trade. Its $69 million campus was built with $50 million in federal and provincial aid, and sits on land leased for 99 years rent-free from the City of Waterloo.

Regardless of how they’re funded, these institutions will, by all appearances, live on long after RIM as we know it today becomes a memory.

It will no doubt be a closely scrutinized first earnings call, as the company continues to face mounting questions on its advertising strategy, its potential for mobile monetization and the impact of a slowing signup rate on the site as a whole. This, especially in light of a decline in overall revenues moving from the fourth quarter of 2011 into the first of this year, and a reported sharp last-minute curtailing of analyst’s estimates in the days leading up to the IPO process.

Also of note: It’s the first earnings call for CEO Mark Zuckerberg, the 28-year-old company CEO who, in his founder’s letter accompanying the company’s S-1 filing, has essentially made no bones about showing his complete lack of concern for what Wall Street thinks of his leadership.

As Zuckerberg famously stated in the letter: “We don’t build services to make money; we make money to build better services.”

Though noble in his intent, those lofty aspirations will do little to sate the investment banks, retail investors and those who have poured billions into one of the most highly sought tech stocks of the past decade.

Others I’d expect to see on the call include COO and newly appointed boardmember Sheryl Sandberg, the woman who led the charge of turning an immensely popular social startup into a viable business. CFO David Ebersman will also most likely be on the call, though it will be interesting to see how active of a role he’ll take, considering the amount of flak received after May’s ugly IPO.

But as the person in control of Facebook with nearly 57 percent of voting power granted by his shares, Zuckerberg needs to be the one to take charge of the call. And with less than a month to go before his big day, he’ll have time to practice.

Earlier this month, the company surprised analysts by reporting quarterly results that were better than anyone expected, and with the revelation that Oracle is now the second-largest provider of software-as-a-service after Salesforce.com, it has challenged the conventional wisdom that it was more of an old-school software company.

But that’s not the most interesting thing I noticed in looking over Oracle’s most recent financials. I saw that a lot of operating expenses were lower — $174 million lower, to be exact — in Oracle’s fiscal 2012 versus fiscal 2011. It looked to me like the Mark Hurd playbook is alive and well. It was the first thing that came to mind when I sat down with the Oracle president (and former CEO of both Hewlett-Packard and NCR) at Oracle’s offices in New York for his second on-the-record interview (here’s the first) with AllThingsD. A transcript of our conversation is below:

AllThingsD: Mark, Oracle had a pretty good quarter, when people expected it to be tougher. Software sales are up, hardware is down. But when I went back and looked at the results, I saw something that looked familiar: Shrinking expense lines in things like marketing and general and administrative. I thought that looked a bit like the old Mark Hurd playbook from HP, and NCR before that. Is that part of what’s going on?

Mark Hurd: I think it was a good quarter for us. The quarter behaved well across virtually every metric. Our pipelines were up. Our conversion rates, which is our ability to convert pipeline into orders, was strong. I think, to your point, we managed our expenses. I think, in the context, if you look at the quarter, we added 3,300 people to our sales organization. And those are really the quota-carrying people, plus the technical people who support the sales people. And we did that while keeping our sales and marketing expenses relatively flat year over year. I think anytime you can realign your capital so you can get it into R&D, or into sales, as we have, it tends to show up. We’ve got more opportunities than we can deal with right now, so we had to increase, and it’s a great thing for us.

And that increase is taking place at a time when some people expected you to cut back. Are you trimming in some places and adding in others?

We’re doing exactly what you’d expect us to do. We’re looking at everything in the company, and trying to ensure that we have our investments in the right place. It’s a team sport. We’ve done a lot of work across Oracle to be prudent in some areas with expenses. But at the same time, we’re investing. Our investment in Research and Development is up. As as you’ve seen, our investment in sales and technical people is up. We’re investing into the business because we think we’ve got a great hand and we want to go play it.

Are you investing in Europe, too? Everyone is concerned about their exposure there, given all the sovereign debt problems and the economic troubles there.

We invested during the year across all the geographies. We grew our U.S. sales organization. We grew our European sales organization. We grew in Latin America, and we grew in Asia. And we grew across most pillars of our business. We made material investments in our applications business, and our cloud applications business. We made investments in middleware — we think we have a very strong suite of middleware, and we want to increase our sales force there. We made investments in business intelligence. We think we have a strong offering with Exalytics, and we want to boost our efforts there. And we’ve made investments in engineered systems, and they’re showing up. If you look at the quarter, we booked almost as many systems in Q4 of 2012 as we did in all of 2011. So I think that’s a compliment to both the product and the capacity of the sales force.

Let’s talk about your engineered systems business, because I think that’s the newest piece that people are just beginning to understand. These are the Exadata, Exalogic and Exalytics systems you’ve been talking about. You’ve got the legacy Sun hardware business on one hand, but what’s fundamentally different about the engineered systems versus the traditional systems?

When you look at Sun, it’s a server line that has the SPARC chip and the Solaris operating system, and it has a very long history. So there’s a couple things we’ve done. Exadata is really a little different than a traditional Sun server. It’s a combination of five different technologies. It has a lot of DRAM memory in it. It has a lot of flash memory in it. It’s got incredible compression technology. We can take a database and shrink it and make it one-tenth the size that it was before. We network it with Infiniband, which gives us 10 times better performance inside it. When you shrink the database by a factor of 10, and run the data inside the computer 10 times faster, you’re doing what you did before 100 times faster. A report that used to take 100 minutes to generate now takes one. And, by the way, you can turn that into a cost benefit or a performance benefit. By that I mean, if you’re happy with 100 minutes, you need only one-tenth of the computer. Or you can run 100 reports in the time it used to take you to run one. It also really combines a server, storage and a database. It’s all of those things, and that’s why we call it an engineered system. And just as important as all of that is the fact that we put it together for you, we provision it for you. Our engineers take the Exadata and integrate everything, which normally you’d have your own people do.

And then you have specific flavors of these systems that are designed for specific industries, say retail or finance or health care?

Depending on how far up the stack goes. Think of Exadata up through the database layer. Exalogic goes up through the middleware layer. Exalytics takes the foundation of Oracle’s business intelligence suite. So they’re three different engineered systems that are built around different parts of the Oracle software stack.

So where does that leave the traditional Sun hardware business?

I think when you speak of Sun, you think of the T Series computer line and the M Series computer line. Larry [CEO Larry Ellison] has done a lot of investments in that core line. So in the traditional server line we’ve done new SPARC silicon, the T4, we’ve brought out a new version of the Solaris operating system, all in an effort to drive better performance and total cost of ownership. And we think now, as we push new releases of SPARC, we think we’re going to have the highest-performing silicon in the computer industry. No one argues that Solaris is the most advanced operating system of the Unixes that are available today. Now we’ve also done something new. We’ve introduced a SPARC Supercluster, and that’s all those different pieces in Exadata, built on a SPARC chip and running Solaris. So if you’re an older Sun-SPARC customer and want the benefit you get from Exadata, but you don’t want to switch over to Intel and Linux, which is what Exadata is built on, you can get them and keep SPARC and Solaris. We’re investing into the Sun base.

That brings me to another interesting point. Without diving too deep into the circumstances around the departure of Keith Block, he got caught in court documents saying some things about Sun products; and earlier, there were some statements made by Larry about letting the business around some older commodity products — Sun products, products where the profit margin is lower — shrink. Obviously you’re not going to defend what Block said, but at the same time, you’ve got Larry saying that it’s okay with him if the sales of certain hardware products fall to zero. Putting myself in the shoes of a longtime Sun customer, I wonder if you can unpack those two ends of a spectrum for me?

The best thing to do is tell you what we’re doing. We’re interested in selling intellectual property that differentiates Oracle in helping our customers run their IT better. That’s what we’re focused on. Those things manifest themselves in the T4 chip and Solaris 11 and SPARC Supercluster, and Exadata and Exalogic, and so on. A product that we bring to the customer that merely passes through our distribution channels and passes through our books, we don’t think we add a lot of value to that. We continue to do it mainly, though with less emphasis, because the customer has asked us to do it. Our view is that Oracle adds value where we can bring to bear differentiated intellectual property that gives people a better, more advanced solution that helps them do something cool and exciting.

Let’s talk about the cloud. Larry said Oracle is on track to be the No. 2 software-as-a-service (SaaS) provider after Salesforce.com, after all those acquisitions you’ve made. Oracle has always been kind of a traditional on-premise software player. How do you see the cloud strategy shaping up?

Let me first say this: You have to separate “cloud” from SaaS. First, there’s an incredible amount of Oracle technology running in the cloud: Oracle databases, Oracle middleware, Exadata, Exalogic. … So if you asked us to give us to give you cloud revenue, it would be huge. But that’s separate from SaaS. Just to be clear: We are No. 2 today in SaaS; we have roughly a billion dollars in SaaS revenue. And we’re just getting started. Our stuff is only just now hitting the market. We will have most of our Oracle portfolio running as SaaS on the Oracle cloud by the end of the calendar year. And when you look at our cloud, it’s best on our technology, running our apps. And by the way, that other SaaS company you mentioned — I can’t remember their name — their stuff is built on Oracle. And it was built three decades ago, in the ’90s. Our stuff is fresh, it’s new and modern and built on Fusion middleware.

Speaking of acquisitions, are you still in the hunt? You did Taleo and RightNow and Collective Intellect recently in the SaaS space. Are you still looking around?

We’ve said we’ve got a balanced capital allocation strategy. We’ve been big buyers of our stock. We’re increasing our dividend. And we’re continuing to look at deals that make sense. Larry has said that sometimes the best growth in Oracle’s history has been during economic downturns. And it’s because so many properties become available.

Did you kick tires on Quest Software?

I can’t comment on M&A matters.

When I talked to Meg Whitman at HP earlier this month, she talked about her desire to have a better relationship with Oracle, and how HP and Oracle crafted one of the “great partnerships in IT industry history.” It sounded a little like an olive branch to me. You’re unique in that you sat on both ends of that partnership at various times. Do you share her sentiment?

I can’t comment on that.

You’re coming up on two years at Oracle. Tell me a little about the division of labor. You work with Larry and CFO Safra Catz. How does it work?

It’s just like Larry said at D: All Things Digital. [See the full video here.] He does a lot on products, as he said. I run the revenue, and Safra runs most of our operations. And then, to be blunt, the three of us come together on the strategic issues, and we talk about the issues that cross the areas.

On that day, HP shares closed at $19.59. Yesterday, they closed at $19.55, marking what is officially a seven-year-low for the shares, a milepost I noticed was approaching last week. Of course it goes without saying that the drop amounts to a new 52-week low, as well.

HP shares continued their fall as markets opened in New York today. As I type, the shares are now trading at $19.36, down 18 cents, or nearly 1 percent.

It’s worth comparing 2012 to early 2005 by another number: HP’s long-term debt. The last time HP shares traded this low, it had $4.6 billion in long-term debt on its balance sheet. As of the quarter ended April 29, that figure has swelled by more than a factor of five, to $25.8 billion.

That figure by itself is alarming enough. But when HP’s debt situation is compared to its peers, the scale of the task ahead for CEO Meg Whitman becomes substantially more daunting.

HP’s net debt — the sum of its short-term and long-term debt minus cash on hand — amounts to slightly less than $21.8 billion, or about 56 percent of HP’s market capitalization as of yesterday’s closing price.

A June 11 research report by analyst Chris Whitmore of Deutsche Bank Securities called this figure out, and compared it to some of HP’s peers, including Dell, Apple and IBM. The graphic he prepared deserves a look, though it was created when HP’s net debt as a percentage of market cap was only 43 percent: Its share price has fallen that far since.

It’s an important figure, given the deteriorating conditions in the global economy, especially in Europe, where the ongoing sovereign debt crisis shows no sign of abating, and where HP historically does about 35 percent of its business, Whitmore argues. It’s a simple fact that companies with more cash and less debt on their balance sheets will probably have an easier time of it.

Less than five months after going public, Groupon’s stock is trading at more than half-off.

Today, the daily deals company’s shares slid another 3.2 percent, or 48 cents, to close at $14.54 a share. That’s less than half the $31.14 that some investors paid at the stock’s high point, just after it went public in early November.

At today’s close, the company’s stock hits a new low, though it slumped to similar levels at the end of November.

The stock has not recovered since last Friday, when Groupon revised its results for the fourth quarter due to higher-than-expected return rates during the holiday period.

Today, lawyers announced that multiple class actions have been filed against the Chicago company. The law firms, however, don’t have a lead plaintiff, and are looking for someone who participated in the company’s IPO and suffered financial losses. The complaint charges that certain officers issued materially false and misleading statements regarding financial results.

As part of the announcement on Friday, Groupon reaffirmed its guidance for the first quarter, and is still expecting revenue of up to $550 million, and net income from operations of up to $35 million. The company will release its first-quarter results on May 14.

Okay, okay, we get it: Morgan Stanley got the coveted left-hand lead position on Facebook’s blockbuster IPO filing. Goldman Sachs is there, too, but in the third-place, always-a-bridesmaid spo,t and is crying big salty tears about the injustice of it all.

It’s hard to feel badly for overpaid investment bankers, and focusing on them is kind of like endlessly discussing the lawyers who processed your mortgage, when the focus should be on the house you’re buying.

Does anyone except a few Richie Rich ZIP Codes in Manhattan care about this one deet of the initial public offering of the social networking giant?

Nope, but there is so little real news ahead of the IPO filing expected today that this is what we are chomping on this morning, as everyone awaits the big doc drop at the Securities and Exchange Commission.

Sources said it is likely to come this afternoon rather than this morning, though. And, perish the thought, all that dotting of I’s and crossing of T’s could delay it to tomorrow, even (unlikely, but mebbe!).

Sigh.

Tidbit: Facebook was actually founded the first Wednesday in February of 2004 in an undergraduate dorm room at Harvard University, like today but eight years later.

Thus, here’s a boring Facebook history timeline chart to look at:

Okay, that was really dull.

What up? The board met, the spinmeisters are at the ready and, most of all, Silicon Valley is stoked to make some more arrogant badillionaires.

Now, hopefully, we’ll get the real news about Facebook.

Namely, who’s getting the big dough in this much-anticipated Web 2.0 gambit? Co-founder and CEO and Hoodie Commander Mark Zuckerberg fer sure, but who else?

Plus all the juicy financials from Facebook, along with stats in usage, growth and just how much the company sticks it to its gaming serf — oops, partner — Zynga and others for the privilege of being on its all-powerful platform.

Me? I pay nada, like other Facebook users, for being able to show off pictures of my vacations and decline friendships from PR people I like, but still … well, you know.

Here is another Facebook financial chart that will not knock your socks off unless you are an accountant:

I am now so comatose waiting for the show to begin that I briefly began a liveblog of my activities this morning.

It went like this:

4:45 am PT: Done with AOL Q4 earnings, which were meh, but better meh than expected. AOL, if you recall, used to be Facebook and now is, um, not.

Note to Zuckerberg: Be nice to people on your way up, since you’ll meet them again on the way down.

4:46 am PT: I check the SEC site and get zip. Click, click, clickety-click over to find out the latest on Demi Moore and her fake-pot debacle.

Who knew there was synthetic cannabis and it is called K2 or Spice? Not me! According to Wikipedia: “It seems likely that synthetic cannabis can precipitate psychosis and in some cases it is prolonged.”

I decide to blame Ashton Kutcher and then wonder if he is an investor in Facebook via BFF-to-errant-celebrities-who-like-tech Ron Conway, also a Facebook investor.

Note to self: Call Ashton! That dude plays village idiots all the time, but I am not fooled by Mr. Pretty Face.

4:47 am PT: I consider email bombing Yahoo’s Jerry Yang, who is probably not so busy right now, and asking him what he thinks about the Demi Moore crisis and also Facebook’s IPO.

Remember when Yahoo was king of Silicon Valley and Yang posed in that purple VW on the cover of that magazine? Better still, remember when Yahoo was going to buy Facebook for just over $1 billion and then borked it?

Just sayin’, Mark — so, keep it reals!

4:48 am PT: I consider going out for doughnuts — and not because of any real weed need. I just would like me some glazed and sprinkled sugar treats right about now. Then, I could post the pictures of them on my Facebook page.

Sweet.

But you-know-who would file right when I left the house on the munchie run. Click, click, clickety-click over to the SEC site and I come up peanuts.

Time to check in on the Kardashians.

You get the idea — so, Facebook IPO, take me away!

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Despite everything, corporate spending on IT was going to hold steady, went the conventional wisdom. Big tech companies selling to big companies — except the financial ones — were supposed to have the situation well in hand. All those big companies looking to get things done in a faster, cheaper and more efficient manner would be writing big checks to the big lumbering tech companies, which would translate into operational savings: Faster servers, faster PCs, cloud services, better software.

At least that was the conventional wisdom until today. Now Oracle has gone and harshed whatever buzz there was left. Once investors got their heads around the wider implications of the software giant’s disappointing quarter, they concluded that the entire enterprise tech sector required a sharp spanking. Here’s a rundown of the damage:

• Oracle shares fell by $3.40 or nearly 12 percent, and briefly traded within 20 cents of their 52-week low.
• IBM, recently the engine of steady, dependable tech growth, fell $5.77, or more than 3 percent.
• Cisco Systems fell 49 cents, or more than 2 percent, and teamed up with Big Blue as the day’s worst Dow performers.
• Salesforce.com fell 5 percent.
• VMWare fell nearly 10 percent.
• SAP fell $3.49, or more than 6 percent.
• Hewlett-Packard held up (relatively) better than the rest, falling only 47 cents, or less than 2 percent.

Okay, you get the picture. Investors wanted out of any stock that touched enterprise tech today. Oracle is considered a bellwether. The result was predictable. But does the crux of the argument that fueled today’s fear have any merit? Maybe not.

There are reasons to hope it’s not quite so bad. For example, IT consulting house Accenture, which saw its own stock fall more than 4 percent today, recently reported a pretty good quarter, with record revenues and earnings. Its strength came from $7.8 billion in new bookings, which isn’t exactly a negative indicator.

Second, even if corporate spending does slow down, tech M&A deals could help larger companies grow despite themselves. Oracle, Cisco and IBM have a combined $87 billion in cash and short-term investments among them. And as we’ve seen, there’s still plenty of appetite among large tech companies for gobbling up smaller ones, especially in the red-hot software-as-service space.

Recent examples include SAP’s $3.4 billion acquisition of SuccessFactors, Oracle’s $1.5 billion deal for RightNow, and Salesforce’s grab of Rypple.

And the potential targets are numerous: There’s Taleo, NetSuite, Workday; even newly public Jive Software.

Finally, the currency weakness that has Oracle and so many other companies running uphill when dealing with non-U.S. customers isn’t going to last forever. Yes, it’s true that IT companies like it better when the dollar is weak against the euro. Considered from that angle, Oracle and other global tech companies suffer less from a demand problem than a temporary — though it is going on way too long — currency problem.

But even if the euro crisis does last well into next year, there are still the BRIC countries, which Intel, another significant tech bellwether, can’t stop praising. And — dare I say it? — the U.S. economy is showing signs of coming back to life. In several states, private payrolls are growing just enough to offset the declines in employment at state and local governments, and as new tax revenue flows, government payroll declines will slow, as well. As 2012 wears on, the U.S. might find itself rolling into an honest-to-goodness recovery, which would fuel improvements to IT budgets. Though the hard-drive shortage caused by the flooding in Thailand won’t make this any easier.

So don’t worry. Or don’t worry too much.

It’s not the only one: Several enterprise software and hardware players are falling right along with Oracle. Salesforce.com, whose primary customer relationship management software rivals Oracle’s, has fallen more than $8, or more than 8 percent. Oracle’s primary software rival, SAP, is down by more than $3, or more than 5 percent. IBM has fallen $6.73, or more than 3 percent. Hewlett-Packard is down 50 cents, or nearly 2 percent. Dell is down 40 cents, or more than 2 percent. Microsoft is falling, too, but not as much.

It looks a lot like what Cannaccord Genuity analyst Richard David predicted in a note to clients this morning. Oracle is something of a bellwether for software company and corporate IT stocks in general. A lot of the problems that sapped Oracle’s results this quarter, David wrote, are specific to Oracle. But in the minds of investors it doesn’t matter:

“Much of the miss was company specific, but it won’t matter this morning. Investors are likely to use this miss as a reason to pound software on Wednesday. We believe Oracle’s miss, combined with Red Hat’s heavily punished but modest scuffle on Tuesday, will first hit infrastructure stocks like VMWare, Citrix Sysems and then for good measure high fliers like Salesforce.com. Our view is more nuanced; Oracle missed because some buyers waited for a new hardware upgrade, and on the software front the firm is behind the curve in cloud applications. We expect Oracle to catch up, but it will be through some R&D and a lot of M&A. We would “back up the truck” on Salesforce if traders knock that stock down because cloud software companies are very likely to gain significant market share from non-cloud vendors.”

Davis cut his rating on Oracle to “Hold” from “Buy,” arguing that the shares will “trade sideways for the next two to three quarters.” Even after an expected “dead cat bounce” — a quick price recovery after a significant fall — Oracle will have some work to do. “Oracle will have to rebuild confidence that the firm is not is not headed to Microsoft’s valuation level over the next few years. Therefore, we can no longer rate Oracle a Buy.”

Not everyone was quite so negative. FBR analyst David Hilal, in a note to clients this morning, lowered his estimates on Oracle’s sales and profits for fiscal 2012. He now expects Oracle to report per-share profits of $2.36, down from $2.44, and cut his sales estimate to $37.7 billion from $39 billion. He also lowered his target to $34 from $38. Even so, he’s still bullish generally, albeit with lower expectations. “The macro debate will now focus on whether IT spending is finally coming under pressure due to broader economic concerns,” Hilal wrote. “While IT spending is not immune to such macro factors, we are not forecasting a material slowdown as we believe enterprises have already been cautious regarding their spending. However, some modest pullback should be expected, particularly post a seasonally strong end to the year.”

BMO Capital analyst Karl Keirstead didn’t agree with Hilal on that point. “Given some weak recent data points from Red Hat, Salesforce.com, Intel and Accenture, we conclude that the macro IT spending backdrop in fact weakened and that the miss was not related to Oracle execution or share losses,” he wrote in a note to clients this morning. “We assumed that Oracle could manage through this tightness and we were obviously wrong.” He lowered his price target to $32 from $38 but maintained a “buy” rating.

Other analysts downgraded Oracle, too. Societé Generale analyst Richard Nguyen cut it to “Hold” from “Buy.” CLSA slashed Oracle shares to “underperform” from “buy,” and lowered its price target to $30 from $36. Deutsche Bank analyst Thomas Ernst lowered his target price to $29 from $33. It’s just one of those days.

So what happened? A few things, as Oracle execs tried to explain on a conference call.

• The currency effect: As President and CFO Safra Catz explained, what had been a 1 percent tailwind for currency effects turned into a 2 percent headwind. With all the violent swings in the value of currencies around the world as compared to the U.S. dollar, Oracle suffered a negative effect that pinched revenue.

• Deals didn’t close during the quarter: Catz said that in the final days and weeks of the quarter, some customers added an extra layer of executive approval to close deals to buy Oracle stuff. That meant that some deals Oracle had expected to close before the quarter’s end moved into the next quarter. Catz said that Oracle has taken steps to better manage deal flow to take this into account. It is consistent, however, with recent statements from other enterprise IT vendors, like IBM and NetApp.
• Transitions: Oracle’s SPARC server business just switched to a new chip called the T4, which was unveiled late in the quarter. The machines require a total upgrade, and that means a lot of testing with existing applications, which can slow down deals for the new machines, while at the same time sapping demand for the prior generation of products. That had a lot to do with hardware sales dropping by 14 percent year over year to $953 million. As Catz put it: “We saw good early demand for the new SPARC SuperCluster, but only released the product for general availability at the very end of the quarter, allowing us to ship only a couple.”

Catz also predicted that hardware sales will decline as much as 14 percent this quarter, although CEO Larry Ellison was bullish on its growth prospects later this year. New software license revenue, a key metric gauging software sales, is expected to grow in a range of 2 percent to 12 percent. Total sales are expected to grow in the range of 3 percent to 7 percent, and per-share earnings are expected to come in between 56 and 59 cents, which is in line with the consensus of analysts.

There were a few things that went right. Ellison did what he usually does on a conference call, and crowed about examples where Oracle is beating a competitor. This time, the targets were IBM, Cisco Systems and SAP, but not his usual punching bag, Hewlett-Packard. Oracle won several competitive deals from Big Blue and Cisco, as well, with customers as varied as Australia’s University of Melbourne, the U.S. Food and Drug Administration and the Hyundai Kia Motor Company.

Ellison also hinted that Apple is a big Oracle customer. He mentioned a “a very large American smartphone manufacturer” that had bought more than 30 Oracle Exadata systems as it built out its cloud. Unless I’m missing something, there’s really only one company that fits that description, and that’s Apple. Its use of Oracle gear within the mix at its North Carolina data centers has been speculated about before, but never confirmed by Apple directly. (Big surprise, that.)

IBM, he says, should meet expectations for the quarter by delivering per-share earnings of $3.31, slightly better than the consensus estimate of $3.21. On top of that, he expects IBM to raise its guidance for earnings on the year to $13.35 per share or higher. Sacconaghi says IBM may earn as much as $13.60 a share this year, depending on how much it ultimately saves from workforce reductions and a lower tax rate. He says that IBM has beat its consensus in each of its last 15 quarters and raised annual earnings guidance in nine of its last 11 quarters.

All good, right? Sure, but how long can IBM keep this sort of thing going? Certainly not forever, especially in a tough global economy. Revenue growth this year will be difficult to compare to last year, Sacconaghi writes, especially in light of a stronger U.S. dollar, a slowing business cycle in hardware upgrades and a slowdown in services growth over the last 18 months. As such, his estimates for revenue growth are below those of the Street consensus: Where the Street expects IBM to report sales of nearly $112 billion in fiscal 2012, Sacconaghi expects $109.3 billion.

“IBM has benefited from a favorable currency environment, which has boosted the company’s headline revenue growth number, which is likely to reverse and pressure IBM’s reported revenues in the first half of 2012 at current spot rates,” he writes. “While we don’t expect this to lead to earnings misses versus the consensus given that IBM hedges, we believe that revenue estimates need to be revised downwards from current levels.”

Given the recent feuds between the management teams at the two companies, Oracle’s acquisitive history and HP’s sudden weakness, it doesn’t take much for a popular narrative of Oracle buying HP to emerge. It would be a dramatic denouement to the events of the last year that have found HP and Oracle at increasingly caustic loggerheads. Oracle CEO Larry Ellison would take some kind of victory lap and mount HP on the wall like a of trophy.

The idea gained some currency with an Aug. 21 story in the New York Post (which, like this Web site, is owned by News Corp.) arguing that HP’s $11.7 billion bid for the British software firm Autonomy, having caused shareholders to knock $12 billion and change off HP’s market cap, would therefore make HP more attractive to Oracle.

The meme gained further currency with a Bloomberg News story saying that HP’s board was “concerned” that its weakened condition had left it vulnerable to Oracle.

Let me put it like this: No. Just, no.

The first problem with the notion is this: What parts of HP would Oracle want to own? Answer: Practically none.

First, let’s look at the condition of Oracle: Its mainline software businesses are showing healthy returns, while its hardware business, built on the foundation of Sun Microsystems, the IT hardware concern it acquired last year for $7 billion, is ramping up to full speed. But here’s a fundamental truth: Software carries a higher profit margin than hardware, so when software companies buy hardware companies, they can’t avoid seeing their overall profitability erode.

Consider Oracle’s operating margin during its fiscal fourth quarter — its seasonally strongest quarter — during the last three years. In 2009, before the Sun deal was closed, it was 43.4 percent. In 2010, after the Sun deal was closed, it was 38.3 percent. In 2011 it was 41.6 percent. And during Oracle’s most recent conference call, CFO Safra Catz said Oracle hopes to get back to “pre-Sun” operating margins soon.

Now let’s look at HP and its operating margins: In its most recent quarter ended July, HP’s enterprise, storage and networking business turned in operating margins of 13 percent, which were down from 14 percent in the prior year’s period. The story was the same in practically every other HP business unit: Operating margins in services fell from 15.7 percent to 13 percent; in software they fell from 28 percent to 19.7 percent; imaging and printing margins fell to 14.6 percent from 16.9 percent. The only place they increased was the personal systems group — the PC unit that’s being considered for a spinoff — where they grew year on year from 4.7 percent to 5.9 percent.

Conclusion: Owning HP would do nothing good for Oracle’s profitability, especially at a moment when the stated goal is to nudge them up.

There’s more. As Mark L. Moerdler, an analyst at Bernstein Research, argued in a research note to clients on Sept. 26, software accounts for about 2 percent of revenue at HP. And what software it has is not the type that Oracle typically likes. When Oracle does acquisitions, it grabs companies that make applications that plug holes in its own product portfolio. The majority of HP’s software offerings — Autonomy nothwithstanding — deal with infrastructure management, not exactly a priority for Oracle. It is, however, a business where IBM and Computer Associates participate.

And there are two historically important business units at HP that would be outliers at Oracle: PCs and printers. Oracle has no interest in either one, and it’s hard to see that changing. Combined they make up more than half of HP’s annual revenue. In the hands of Oracle, they would probably end up being spun out, either together or separately, but why buy a whole company only to chop off more than half of it — a half that’s shrinking at that — at what would have to be unfavorable terms.

Let’s not forget the valuation estimate of HP’s $40 billion PC business: Analysts have expected that a hypothetical buyer might pay as little as $8 billion for it, or about one-fifth trailing revenue. Why go to all that trouble?

Further: Why would Oracle buy a company that’s roughly one-quarter exposed to the consumer market. Sure, HP has a retail distribution network that’s the envy of the PC industry. But Oracle would rather sell those retailers systems to help them manage their businesses, not the PCs they in turn resell at razor-thin margins.

If that’s not enough, then there’s one key bit about HP that Oracle would actively dislike. HP, by virtue of being the biggest distributor of Windows-based PCs and servers, is the world’s largest reseller of Microsoft Windows. If there’s anything more utterly antithetical to Oracle’s core values than helping put money in Microsoft’s pocket, I haven’t heard of it.

Finally, there’s the issue of cash. Even in its weakened state, HP is trading at a market cap of $45 billion and change. Assuming a premium for the whole thing, that pushes a hypothetical price tag to $60 billion. That’s too rich, even for Oracle, whose balance sheet as of Aug. 31 contained a combined $31.6 billion in cash and marketable securities. It would have to take on a tremendous amount of debt — amounting to 82 percent of fiscal 2011 sales — to get such a deal started, let alone closed.

HP’s directors and shareholders can rest easy. They have many worries about the Silicon Valley icon and the troubles in which it finds itself. But being acquired by Oracle isn’t one of them.

Gone is the webOS hardware business acquired with Palm last year, though the WebOS software business remains alive and well for now. The business of selling phones and tablets was unceremoniously killed in a move reminiscent of Cisco Systems’s decision to kill its Flip video camera business. At least we know why: As AllThingsD reported exclusively Tuesday night, sales of HP’s TouchPad have been embarrassingly bad, particularly at Best Buy.

Soon to be going — either spun off or sold — is HP’s consumer PC business. Exactly what will happen there is anyone’s guess. Will HP create an independent company or sell it? If it’s to be a sale, the smart money says that Samsung would be a possible buyer, and sources have told AllThingsD that HP was shopping the PC business around Asia earlier this year. But there are several reasons that HP would choose to follow the model of Motorola and spin the unit off into an independent company. As CEO Léo Apotheker said on the conference call, all options are on the table, including a spinoff sale to another company, sale to private equity, or even no transaction at all. The reason for making today’s “strategic options” announcement is that it frees up management and the board of directors to take a deep dive and look at what’s best. My guess: Bet on a spinoff.

My notes from the conference call are below.

2:01 pm: And so we’re waiting for the conference call to start. Lots of soothing music to keep our minds off all the questions reeling in our heads.

Among those questions: What kind of transaction can we expect for Hewlett-Packard’s PC unit? A spinoff or a sale? Will it include the enterprise PC business as well as the consumer PC business?

Was there ever any attempt to sell the webOS assets? What about the webOS and Palm-related portfolio of patents? I bet those are pretty valuable right now. Will HP sell them or keep them?

The call is underway.

Léo will be speaking shortly.

2:05 pm: And here’s Léo.

Today is all about driving shareholder value and addressing the challenges in our business. I’ve been CEO for nine months and made some tough decisions. There are four elements to the path forward.

Consumers are changing the use of the PC, and sales of the TouchPad are not meeting expectations. (Where have I heard that before?)

The plan to separate PSG is to sharpen HP’s focus on cloud and other services. There are tactical issues to consider. We are still facing headwinds, stemming from the Japan earthquake, in the printing business.

There is a clear secular movement in the consumer PC space. The tablet effect is real, and the TouchPad is not gaining momentum in the marketplace.

For our PC business to function properly, it needs to be able to make decisions that are best for itself. We anticipate we will take 12 to 18 months to complete this process.

Additionally, we have been tracking the progress of webOS. We were successful at launching software that was praised. We are exploring options of how best to optimize the webOS assets in the future. The devices aren’t getting traction. Continuing to execute in this market space is no longer in HP’s interest. The webOS hardware business will be shut down by Q4.

Now on to services. The transformation will be a multiquarter journey. We are focused on addressing sales delivery and other challenges.

He’s now announcing John Visentin as the head of Enterprise Services. He’s an IBM veteran and has previously run Enterprise Services. He’s Ann Livermore’s replacement, and thus has big shoes to fill.

Now on to tactical challenges. In business critical services, we think the Itanium platform is the best in the industry. We are fully committed. We are doing everythying we can, including pursuing legal action against Oracle’s “anticompetitive behavior.” (Long story, but you can read several posts I’ve written about this.)

Fourth: Adding more value-added intellectual property. More software. More big data. More cloud.

2:14 pm: A good example is the acquisition of Vertica.

And now he’s talking about the acquisition of Autonomy. Here are the financials: This is a milestone, because there is a very real need to address the explosion of structured and unstructured data.

HP will pay $42.11 per share, though Léo is giving the amounts in British pounds.

2:17 pm: In 2010, Autonomy had gross margins in the high 80 percent range, and operating margins in the 40-plus percent range. Autonomy will continue to operate separately.

As an executive who has spent most of my career in software, it is a world I know well. We believe this transaction will unlock synergies across multiple industry verticals. We are building a strong HP software business.

We are focusing on what needs to be fixed, shut down and considered for separation.

A comment on guidance. I am lowering the Q4 guidance in order to be realistic about where we are. I don’t take this action lightly. I know our investors don’t like being in that position, and neither do I.

I am taking ownership for these actions and investments as we shape the new HP.

Cathie Lesjak, CFO, is now speaking and doing the numbers. “This is the toughest guidance in my career as CFO.”

Company gross margin of 23.3 percent was down 70 basis points year on year. Printing and webOS posted lower gross margins, which were offset by favorable commodity environments.

Generated $3 billion in earnings from operations, down 14 percent sequentially and down from $3.4 billion a year ago.

HP repurchased $4.6 billion of shares.

Segment info: Personal systems, revenue of $9.6 billion, down three percent from prior year.

Commercial client revenue grew nine percent, led by workstations. Consumer down 17 percent. Ouch. Desktops and notebooks equally affected by drop in consumer demand.

Lesjak says webOS ran a loss. Clearly, the sell-through wasn’t what was expected. It quickly became clear that pricing parity wouldn’t generate demand. The price cuts had added incremental cost to our model. We took a five-cent charge to EPS. We would expect a bigger loss in Q4.

To make this a financial success would create more risk without certain returns. We will explore options for strategic value of the software. (Hint hint, webOS software is for sale. Again.)

Now on to the printing business. Three million Web-connected printers sold. Sell-through is slowing in supplies. Supplies business tends to follow the economy. Expect a revenue and margin impact for the next few quarters.

Still more troubles from Japanese currency and the rise in the yen. Expect that to continue, too.

Our services transformation is a four- to six-quarter journey.

Industry standard servers: We expect to show share gains, though we expect growth to slow. HP remains number one in blade services.

Revenue decline in business critical servers is down nine percent because of the legal mess with Oracle.

3PAR sales continue to accelerate. Seems it was worth taking on that bidding war with Dell last year.

Balance sheet: Total gross cash of $13 billion. Looks like the Autonomy deal is going to consume $11 billion of that, if I read the presentation of that deal correctly.

Long-term EPS commitment is now gone. I think Lesjak said it was $7.14 in EPS by 2014. I may have mangled that. Whatever, they’re not going to make it now, anyway.

Q4 EPS expected at 44 to 55 cents a share.

Léo is back. This is about a transformation of HP for a new future. HP is at a critical point in its existence. These changes are fundamental. The changes will transform HP. The transformation starts today.

And here’s the Q&A. Should be interesting.

2:39 pm: Morgan Stanley. Can you talk about which customer segments and geos weakened in July, and which ones will weaken in October?

Léo: A summary of this — we saw our business in Asia grow, and if you look at the other two regions, they declined in constant currency. On a rough basis, consumer PCs declined while commercial increased. We had good performance in ESSN. But public sector, which is 10 percent of business, is being impacted by budget constraints on both sides of the Atlantic.

Lesjak: We had a back end loaded quarter, but it was softer that we expected in July.

Barclays asks about services: Did you cut enough when you bought EDS? Is 12.5 percent margins low enough?

Léo: We are making progress on services. One thing we are focused on is growing the top line. We didn’t do it. We now have a leader for this business. What we are trying to achieve is a much better mix, from the execution standpoint. We can increase our coverage and bench in application and services. We are engaged in a systematic account review, so we are optimizing value.

Lesjak: I said 12.5 percent. We are affected by the weakness in public sector, and also by business critical systems. (There’s the Itanium fight with Oracle rearing its head again. -Ed.)

Citigroup ask about the synergies between printers and enterprise business. How do you feel about keeping printers and enterprise together?

Léo: IPG, the printing unit, is important to HP. It has been leading the disruption of the analog printing market.

IPG has the opportunity to reinforce its strengths. We are driving our document- and content-management solutions. With the acquisition we announced today, we will be able to provide IPG with additional intellectual property.

Sanford Bernstein asks about Autonomy. You are paying a fantastic price. He’s worrying that HP is overpaying for Autonomy at a time when HP’s stock is at a historic low. It’s going to cost you 15 percent of your market cap. Also it’s going to eat into the cash position.

Léo: Let me start by making sure everyone understands what Autonomy represents. It will allow us to lead a large and growing space, enterprise information management. It will help customers manager the explosion of information. It will position HP in a large and growing space. It will provide differentiated IP for services. It will give IPG a base for content management.

Léo: Autonomy has grown its revenue at compound annual growth rate of 55 percent over three years. We think we can extract a lot more out of it by combining it with HP.

Lesjak is speaking about cash. We have repurchased $15.6 billion worth of shares. We would spend to rebuild our balance sheet, and will moderate share buybacks.

2:49 pm: Cross Research on Personal Systems Group: Why not spin it off now? And also on webOS. What about the plan (announced at D) for putting webOS in PCs?

Léo: What the board and management team have been working on is to look at our options, and what the board has decided to do is look at all the options. This will allow us to look at it much more closely. Over time, a decision will crystallize. All I can say now. We will refrain from commenting further. On webOS software business, we are looking at all our strategic options regarding the software. The software has been received very well. We will be looking at all of the options to third parties, to others who need this kind of option. Licensing or other possibilities, to extract value from webOS.

Wow.

Goldman Sachs question: How should we think about strategic actions versus the need for further cost reductions, in light of the view that there’s been an underinvestment in prior years?

Léo: He’s not taking the bait to repeat the “Blame Hurd” message from last quarter.

BMO’s Keith Bachman, whose downgrade caused so much share-value loss yesterday, asks about the growth prospects at Autonomy.

Léo: When you analyze the numbers of Autonomy, they have been executing a shift to software as a service, or cloud services. They are one of the few traditional license-based companies who have executed such a successful transaction. Roughly one-third of revenues are cloud-based. Not going to talk about forward growth rates.

Raymond James: On PC, you’ve talked about strong return on capital in that business. Can you talk about what changed?

Léo: One of the reasons we announced today was so that we can study. We are going to look at all of our options, and also want to make sure everyone understands that all options are possible, including a nontransaction. Which means they may not ultimately sell the PC unit.

2:56 pm: Stifel Nicolaus asks: Operating profitability for two segments: Enterprise seems to be at 13 percent, which is below previous guidance. And the same question to imaging and printer, now 14.7 percent, though having supply-chain problems.

Lesjak: The macro picture has deteriorated since last quarter. We saw softness in Europe and Americas. Also there’s the lower mix of systems in Business Critical Systems. (Another reference to the Oracle fight.)

Another question, though I didn’t catch the firm that asked: Is there scope to cut more costs at HP at the group level?

Léo: How are we performing compared to peers? In fact, we are actually competing rather well. Our market share across the vast majority are stable, or in a few cases we have eked out gains. Are there any specific issues affecting our business in particular? We are facing macro trends. What HP is facing are essentially the following things: We are being challenged on business critical systems. We have an issue in printing, which was impacted by Japan. Overall, we have one issue that we want to tackle, and that’s our productivity in the salesforce. We are going to create a unified platform for the salesforce to go to market. We are now going to have a regular cadence and discipline around managing major accounts in this company.

3:01 pm: UBS question. How much of the $332 million in operating losses is related to webOS? How long is the leash to lower the losses or get to break-even?

Lesjak: We remain at the operating expenses of one to two cents a quarter.

A question from Jeffries about free cash flow. Can you give us an understanding of the cash balance? Also, do we have any bullet payments? Also around Autonomy: If it’s going to be independent, but if you see synergies, how will you integrate it?

Léo: Yes, we will run Autonomy as a separate entity. Of course we will be looking for synergies as quickly as possible. First off, we will give Autonomy access to our channels. We will be working across our softare teams and theirs. IPG is one case. There are other things we can do with ESSN, as you can imagine.

Lesjak: We ended with $13 billion in gross cash. With our lower top-line expectation, and the cash charges related to webOS shutdown, that is putting downward pressure on cash flow. We expect free cash flow for the year of $8 billion.

3:04 pm: Question from Gleacher about storage. What will drive that business to higher growth rates?

Léo: Our storage business is going through a mix shift. 3PAR is growing triple digits year over year. We are in the early days of the P6000(?) launch.

Lesjak: 3PAR revenue is up triple digits on a normalized basis.

ISI question: If PSG transition could take a year, do you expect disruptions in PSG revenue?

Léo: I just want to be sure that people understand that PSG will be managed in a normal manner. The team and employees and everyone will continue as if we are a normal day-to-day business. That is the expectation that we have. I’m sure we can manage whatever transition happens.

One more question, from RBC Capital: Can’t hear it well. Sorry, RBC.

And that’s a wrap.

Related posts

• Hewlett-Packard Says Goodbye to PCs, webOS
• HP Pulls Plug on webOS Hardware, Leaves OS Future in Doubt
• HP And webOS: But They Seemed So Happy Together!
• Liveblogging HP’s “Everything Including the Kitchen Sink” Conference Call
• HP’s Apotheker: We Struck Out with WebOS, but Maybe Someone Else Wants a Swing?
• Viral Video: Like Palm’s Creepy Naked Lady, TouchPad’s Floating Celeb Heads Get the HP Boot
• Licensing webOS May Not Be Much of an Option for HP
• Hewlett-Packard’s PC Business: What Happens Next?
• Worth More Dead Than Alive: Could HP Turn a Profit on Palm’s Patents?
• With HP’s Raising of the World’s Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

While Dell’s per-share earnings were 54 cents, about five cents ahead of the consensus, sales were $15.66 billion, a full $100 million shy of what analysts expected. Worse, Dell said it expects revenue in the third quarter to be “roughly flat” relative to the second quarter, which it said would be consistent with typical seasonal patterns seen over the last two years.

There’s more: Dell slashed its sales growth outlook for the year. It said it now expects revenue to grow in a range of one to five percent, down from its previous range of five to nine percent.

CEO Michael Dell tried to reassure investors of an eventual turnaround in a statement: “We continue to see great momentum in the high-growth areas of our business, which is a direct reflection of the discipline and strong execution our global Dell team is applying to help solve real-world challenges for our customers. We’re creating efficiency across every step of the IT value chain and ultimately enabling all customers — from home users to large businesses and government organizations — to achieve the outcomes that matter most to them.”

It wasn’t enough to calm skittish investors: Dell shares initially fell as much as six percent on the news, and are as of 1:25 pm Pacific Time trading down 4.2 percent, or 64 cents.

The new authorization comes on top of another $10 billion authorized last year, of which about $4 billion has been used.

As of April 30, HP had $12.7 billion in cash. The company says it will use the authorization “from time to time” to buy shares back “opportunistically,” or when the share price is low, and to offset dilution created by employee stock plans.

HP shares rose 95 cents, or more than 2.5 percent, closing at $36.23 during the regular session, and rose further in after-hours trading after the filing became public. The shares have fallen by 14 percent since the start of the year.

Of those leaving the company, 2,100 are taking a voluntary retirement buyout package that’s been made available to people whose age and years of service add up to a sum of 50 60. For example, an employee 40 50 years old with 10 years at Cisco would be eligible. An additional 4,400 will lose their jobs outright, but will no doubt receive severance packages. The remaining 5,000 or so are employees of a Cisco plant in Mexico that is being sold to Foxconn, the Taiwanese contract manufacturer. They will become Foxconn employees.

These reductions are the third significant step in what’s expected to be a four-step process, spearheaded by CEO John Chambers, to get Cisco on a leaner, more competitive and more profitable path. Analysts are, so far, fairly positive on the cuts.

Brian Marshall of Gleacher & Co. in San Francisco, who last week predicted that Cisco would cut 5,000, gave a tentative thumbs-up to the move. Cisco’s goal throughout the process has been to take out $1 billion in annual operating costs. Marshall says that it looks like Cisco could do better than that: He thinks the cuts could yield $1.7 billion in savings and add 25 cents in per-share earnings to the bottom line in 2012.

Breaking it down, he says the 6,500 jobs cut could result in $1.3 billion in savings from retirements and firings, assuming a cost of about $200,000 per head. The sale of the facility in Mexico will yield about $400 million in reduced cost of goods sold (COGS).

The next step, which Marshall expects in September, will be for Cisco to recalibrate its long-term financial expectations. Long accustomed to telling Wall Street to expect in the 12 to 17 percent range, the more realistic range for Cisco, Marshall says, is now closer to 10 percent, plus or minus a few points. Gross margin expectations will have to come down, too, to about 25 percent, down from a range of 28 to 31 percent.

Shaw Wu of Sterne Agee in San Francisco called the reductions “painful but necessary.” He notes that Silicon Valley hiring has been pretty strong of late and that those Cisco folks losing their jobs should have little trouble finding work at companies like Facebook, Apple or Google, though I’d suggest that Hewlett-Packard’s up-and-coming networking unit or Juniper will be eager to pick up some Cisco talent.

On the sale of the factory to Foxconn, Wu sees Cisco as winding up for a spin-off of the set-top box business. “We view the Foxconn transaction as effectively a restructuring of its lower margin set-top box business and think ironically, could make a potential future spin-off easier with the manufacturing detached.”

Update: A few of you have written to say my initial characterization of the retirement package terms was incorrect. The required sum of age plus years of service is 60, not 50. Sorry about that.

Having closed on Friday at $14.97, the price of Cisco shares is nearing its lowest point in about five years (Cisco hit $14.18 in March of 2009). CEO John Chambers has blamed toughening competition in its main networking business, lower profit margins resulting from a product transition and a drop in government spending for many of its troubles. A significant restructuring is coming some time before the end of the summer that will combine offering retirement packages to eligible employees and laying off others. It’s also possible that other parts of Cisco’s business may be sold, spun off or shut down.

Chambers’ plan is to trim Cisco’s operating costs by $1 billion a year. Meanwhile, the video business that Chambers constantly talks about is starting to get interesting and competitive, and other products, like its blade servers, are starting to show some traction. And by the way, the Internet isn’t exactly getting smaller, you know.

Whatever it is, it better happen soon, Wu says, because investors are getting impatient. “In sum, we believe Cisco is fixable and not structurally flawed, but admit we need to see more dramatic steps be taken,” he writes.

While some investors have been calling for Chambers to step down, Wu isn’t with them. “From an investor standpoint, most believe that Cisco will be very difficult to turn around and that a management change is needed. While we do not believe that John Chambers needs to go, as we believe he has proven to be one of the greatest managers and visionaries of the modern era, we do believe he needs to make bigger moves than what has been done so far.” One suggestion? Boost the dividend to 3 percent from its current 1.6 percent.

Also? Cisco may have to take some “bitter medicine” on the price of its switches and other networking gear. Many Cisco customers and its channel resellers told Wu that Cisco’s prices are too high when compared to competitors, and that it may be pricing itself out of the market. “Many believe that Cisco still deserves a premium, but 50 to 100 percent seems a bit excessive,” he writes. “Because of this, we believe Cisco will likely need to take the bitter medicine of lower gross margin for longer-term good.” He cut his assumptions on Cisco’s gross margin accordingly from about 62 percent to a little higher than 55 percent.

That said, most of the the bad news at Cisco is priced in, making its depressed price a fair buying opportunity, he says. “We believe the Cisco story is getting better, and we’d rather be a buyer at these depressed levels than wait for obvious evidence of improvement. By then it may be too late.”

Wu still rates Cisco shares a buy, with a price target of $25, which is a drop from his previous target of $29. He also lowered his fiscal year 2012 estimates on Cisco’s revenue and per-share earnings to $45.9 billion and $1.50 per share, from $46.5 billion and $1.80 a share. The new target price represents a multiple of 12.5 times Cisco’s projected calendar year earnings of $1.62.

Wu also thinks Cisco will start setting more realistic expectations going forward, and back away from its projecting a long-term annual growth rate of 12 to 17 percent, which, he says, “no one believed anyway.”

Given all that, Cisco’s close to turning the corner, he says, though it won’t happen right away. “We realize that Cisco may take a few quarters in fixing itself, but we believe management will make the right moves in restoring investor creditability.”

(Image borrowed from the 1938 Warner Bros. classic animated short, Porky In Wackyland.)

Analysts had been calling for Sirius to break even in its fourth quarter on revenue of $740 million. Instead it reported a loss of $81.4 million, or two cents a share, on revenue of $735.9 million. The reason for the miss: An increase in operating expenses and $85.4 million in debt-extinguishment losses.

Unfortunate. Still, the company’s latest financials weren’t without some good news. Sirius added 328,789 new subscribers in the fourth quarter, up from 257,028 in the fourth quarter of 2009. And it ended 2010 with 20.2 million subscribers, 8 percent more than the 18.8 million it claimed at the end of 2009, and well above its target of 20.1 million.

Today’s the day we find out whether Cisco has successfully navigated the turbulence, and how bad the air pockets truly were. So far, the indications suggest that Cisco is starting to fly clear of the trouble. The consensus of analysts surveyed by Thomson Financial calls for Cisco to report per-share earnings of 35 cents on sales of $10.24 billion.

Barclays Capital analyst Jeff Kvaal wrote in a research note issued Monday that Cisco’s end markets look healthy. Telecom carriers and Internet service providers are spending, and you see that reflected in reports from Juniper, which show sales to service providers up 24 percent, and in AT&T’s optimistic capital spending outlook. Meanwhile, growth in enterprise spending is holding steady as companies improve their networks. And in the end, Cisco’s guidance for sales to grow 3 to 5 percent may prove a tad conservative, meaning those air pockets may not have been as entirely bad as originally thought.