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Hewlett Packard (HPQ) reported its 1Q07 results after the close yesterday.

HP announced financial results for its first fiscal quarter ended Jan. 31, 2007, with net revenue of $25.1 billion, representing growth of 11% year-over-year, or 7% when adjusted for the effects of currency.

Those results were more or less in line with those posted by Ingram Micro (IM). And like Ingram, Hewlett Packard expects the revenue growth rate to slow to a single-digit pace in the April quarter, despite the availability of Windows Vista for the entire quarter. So while the company’s new guidance is higher than consensus estimates, it still marks a slowdown. This, in turn, helps explain why the stock is trading down after hours.

Furthermore, Hewlett Packard showed a worrying negative cash flow from operations despite rising net income for the quarter. While one quarter’s numbers can be influenced by a variety of factors, the negative $1.9 billion swing from the same quarter last year at the very least bears monitoring. The main culprits were rising inventory and a change in “other assets and liabilities.” Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Second Edition warns that growth in such assets can be a sign that normal operating expenses are being capitalized, giving a temporary boost to earnings.

These concerns may prove temporary, but the market is in no mood for slowing growth and rising inventories - especially right after the launch of the product (Vista) that was supposed to launch a tech stock revival.

HPQ 1-yr chart:

HPQ 1-yr chart

Source: H-P's Earnings Beat Estimates But Concerns Remain