The world's largest PC maker isn't the only one dampening investors' expectations for this coming earnings season.
Across the S&P 500, corporate chiefs' pre-announcements have been the most dour since 2001, according to Thomson Reuters data, even before Hewlett-Packard's (HPQ) Wednesday warning.
Analysts are setting a lower bar. They see total S&P 500 revenue coming in flat. Earnings should decline 2.3% — the first drop since Q3 2009, when the nation crawled out of the last recession.
The S&P 500, boosted by QE3 and other stimulus, sits near its highest level in almost five years. But Europe's troubles, slowing Chinese growth and sluggishness at home likely weighed down earnings.
And the looming year-end "fiscal cliff" of tax hikes and spending curbs is discouraging business hiring and investment.
"Positive earnings surprises could be a catalyst for the market given the current low expectations," said Greg Harrison, corporate earnings research analyst with Thomson Reuters. "However, company management teams have not been optimistic about their chances of beating estimates.
Q3 earnings season unofficially kicks off Tuesday with aluminum giant Alcoa (AA). Analysts expect just 1 cent per share, vs. 15 cents a year ago. Global fast-food giant Yum Brands (YUM) also reports Oct. 9. Wall Street sees a 17% EPS gain.
Already 22 firms in the S&P 500 have posted, with 55% beating views. Last quarter, 67% topped higher, though still modest views. The long-term average for beating forecasts is 63%.
And there have been 4.3 negative pre-announcements for each firm guiding higher. The average is 2.4 negative to positive.
The latest harbinger of woes came from HP CEO Meg Whitman, who told analysts it will take longer than expected to turn the struggling tech giant around.
Before that warning, analysts expect a 2.3% profit gain for the technology sector — led by mega-cap Apple (AAPL).
Analysts expect the biggest profit decline from the materials sector, seen down 23.8% from last year. Energy companies are forecast to post a 19.5% decline.
Consumer discretionary is a relative bright spot, with forecasts for 7.7% earnings growth. This sector tends to be more domestic-focused, and U.S. consumers have become more upbeat even as business sentiment sours.
Nike (NKE) beat views last week, though the global shoe and apparel giant warned of sharply lower future orders from China.
Luxury brands, including non-S&P 500 stock Michael Kors (KORS), have cited still-robust spending.
S&P 500 financial earnings are seen climbing 5.5%.
Alan Zafran, partner with Luminous Capital, noted other head winds. Corporate profit margins, near multidecade highs, are being pinched by rising input costs. Little room remains to squeeze labor costs.
But stocks are more attractive than other assets, he says.
"We remain guarded, but we recognize non-equity alternatives are not terribly compelling either," Zafran said.