H-P: Separating the Good From the Bad

Updates stock information

PALO ALTO, Calif. (TheStreet) -- Despite taking a big third-quarter profit hit, Hewlett-Packard(HPQ Quote) could still offer plenty of upside for tech investors.

The Palo Alto, Calif.-based firm's profit plunged 19% year over year, which seems to have overshadowed the fact that H-P beat Wall Street's third-quarter estimates.

With H-P seen as a barometer for tech spending, the profit plunge pushed the company's shares down slightly, to $43.95, in trading Wednesday. Even in a tough spending climate, though, there were still positives in H-P's numbers.

Hewlett-Packard Wins

H-P's services business was the highlight of the company's third quarter, with revenue leaping a massive 93%, thanks largely to the firm's EDS acquisition. PCs and printers, however, were more problematic, slumping 18% and 20%, respectively, although things may be looking up.

"Most of our customers are doing the planning for 2010 -- we think that 2010 will be a better year than 2009," said H-P CEO Mark Hurd. "We are encouraged by the stability that we are beginning to see in the market but not yet at a point that we are ready to call it a turn."

With rival IBM(IBM Quote) recently posting impressive second-quarter results, there were high hopes for H-P's quarter, although the company has provided something of a tech spending reality check.

Even in a slowly improving economy, however, analysts feel that H-P still has plenty to offer investors. Although the company's stock has risen steadily in the last five months, at least one analyst thinks it could still provide plenty of upside.