H-P's Turnaround Rings True

"There is potential for upside to consensus estimates as H-P fleshes out the details of its restructuring," Shaw says. What's more, "the Street doesn't appreciate the savings H-P could reap through fiscal year 2009 from streamlining processes and improving IT."

But some analysts advise a cautious approach. Needham & Co. analyst Charles Wolf, who rates H-P hold and values the stock at $22 (it closed Monday at $29.97), is waiting to see improvement in revenue growth. Robert Jakobsen at Jyske Bank agrees, saying Dell and IBM are more attractive as their revenue is poised for faster growth. Neither company has an investment banking relationship with H-P.

But it may be risky to underestimate the ability of Hurd, who has already surprised many with his ability to undo many of the missteps of the Fiorina era. Supporters and detractors of Fiorina will always disagree on whether she was better at photo ops than she was running a tech conglomerate.

But the numbers since her departure present a compelling case. In the fourth quarter of 2004, the operating margin for H-P's enterprise storage and servers, which make up about one-fifth of the company's revenue, was 2.6%. In the fourth quarter of 2005, under Hurd's steady hand, the operating margin grew to 9.1%.

This is significant because the storage market is one of the key areas for H-P's future growth. Revenue from disk storage systems grew 12.5% to $3.9 billion in the third quarter, according to research firm IDC, which noted that the growth rate was the fastest since it started tracking the sector in 2001.

What's more, the market leader EMC saw its market share slip one percentage point to 20.3% from the year-ago quarter, while H-P's share grew 40 basis points to 19.1%, IDC said. So, H-P is poised to take the lead spot in the growing storage market if those trends continue.