H-P slips. Street weighs revenue strength, price/margin pressure.

|By:, SA News Editor

With shares having more than doubled from their late-2012 lows, H-P (HPQ -1.6%) is seeing a bit of profit-taking following its FQ1 beat, as the Street takes stock of the pricing/margin pressures that contributed to the IT giant's light FQ2 EPS guidance.

CFO Cathie Lesjak mentioned on the CC (transcript) H-P "[continues] to experience an aggressive pricing environment across [its] hardware businesses," and that this is offsetting productivity/efficiency gains.

Price pressure for laser printers, ink, and enterprise hardware was mentioned in particular. Overall, gross margin fell 20 bps Q/Q and rose 50 bps Y/Y to 22.8%.

BMO estimates one-time items provided a $0.06-$0.07 boost to FQ1 EPS. At the same time, the firm observes quarterly free cash flow ($2.4B, soundly above net income of $1.7B) beat expectations, and is hiking its FY14 FCF forecast by $700M to $7.6B.

Goldman, bearish since last April, is upping its FY14-16 estimates, but continues to believe "secular pressures across ... key segments will force a reset in steady-state earnings power."