Hewlett-Packard Company (NYSE:HPQ) is scheduled to release its next earnings report tomorrow, and UBS analysts are expecting solid results. They still expect the company to outperform competitor International Business Machines Corp (NYSE:IBM) but suggest that Hewlett-Packard may not be surviving on a sustainable strategy.

Hewlett-Packard

Expectations for Hewlett-Packard’s earnings report

In a report dated Aug. 18,2014, analyst Steven Milunovich and his associate John Roy note that Hewlett-Packard has had difficult third fiscal quarters historically, although last year’s numbers were “fine.” They expect this year’s report to be in line with estimates.

They’re looking for $27.2 billion in revenue for the company’s third fiscal quarter. That would be flat with last year. They’re also estimating earnings of 88 cents per share. That’s compared to the company’s guidance of between 86 cents and 90 cents per share.

Meanwhile Hewlett-Packard CEO Meg Whitman continues to improve execution at the company, as she implemented the “Playing to Win” strategy she learned at The Procter & Gamble Company (NYSE:PG). The UBS team said this strategy is “critical” to the technology giant’s turnaround.

Hewlett-Packard’s cash flow supported by PCs, printers

The analysts expect PCs and printers to continue supporting Hewlett-Packard’s cash flow. They’re projecting a 5% increase in PC revenue, which is down from last year’s 8% growth. They note that last year offers a difficult comparison, however, as the company recorded a large Indian sale last year.

Nonetheless, they say that 5% growth would still be “impressive” because the broader PC market has been flat in units. There have been mixed reports about the strength of PCs since Microsoft Corporation (NASDAQ:MSFT) stopped supporting Windows XP. As a result, the UBS team sees a risk of further deceleration in PC revenue. Their PC results offer a contribution to their full year free cash flow estimate of $8 billion.

However, in printing, they’re expecting a 2% decline, although they say this could end up being optimistic because Hewlett-Packard is still working through laser supplies in its European channel. The UBS analysts add that the weak yen has increased printer margins so much though that the segment is again over 40% of the company’s profits.

Hewlett-Packard and enterprise

The UBS team also said there could be some signs of encouragement in the enterprise division. They said it’s possible that Cisco Systems, Inc. (NASDAQ:CSCO)’s and NetApp Inc. (NASDAQ:NTAP)’s possible plans for higher spending in IT could provide a boost to HP’s results, particularly in x86 server and storage.

They remain concerned, however, about the recent weakening in Europe, where Hewlett-Packard remains overweight compared to is competitors. They estimate that the company’s enterprise revenue could be off by 2% year over year, just as it was in the last quarter. They say x86 servers could rise 1%, while Tech Services may fall 4% and storage could decline 5%.

HP did say it expects to see a bounce-back in storage growth in the second half of the year, which might offer upside. The UBS analysts say enterprise services could decline 4%, although the margin could improve because they say HP “faces a steep ramp to make its margin guidance.”

The analysts maintained their Neutral rating and $34 per share price target on Hewlett-Packard.