Why HP's One for the Long Haul

NEW YORK (TheStreet) -- HP's(HPQ) fiscal first-quarter profit may have dropped 44% year-over-year as the company transitions itself under new CEO Meg Whitman, but the tech giant isn't worth giving up on yet.

Investors must be patient with HP, say some analysts, as the company is still reeling from internal upheaval, global hard disk drive shortages and a weak U.S. economy.

HP CEO Meg Whitman

"Considering the enormous value destruction over the past two years at HPQ, its recuperation will take time, but we believe HPQ is off to decent start under new leadership," ISI analyst Brian Marshall wrote in a recent note.

Marshall pointed to HP's server and networking segments as key areas of strength. He reiterated a buy rating of HP with a price target of $34.

"HPQ is an underappreciated turnaround story," echoed Sterne Agee analyst Shaw Wu.

Whitman is trying to convince shareholders that while HP's turnaround strategy will take time, the company will not fade into irrelevance.

"It's not easy work and it's not a quick fix, but it holds the potential to improve the way we operate and execute, and it simply has to be done," Whitman said during an earnings call with analysts. "We have got to save to invest. We have got to save to grow ... I have no doubt that we'll turn HP around."

Some HP shareholders are holding out hope for the company, though they're expecting a tough slog ahead.

"There's a good chance of a turnaround there, it's just a chance of 'what's the end game?'" said Karl Mills, president of investment management and advisory firm Jurika, Mills & Keifer in San Francisco. "

HP reported first-quarter earnings of 92 cents per share on revenue of $30 billion. Wall Street analysts had predicted a profit of 87 cents per share on revenue of $30.7 billion.

The company also gave disappointing guidance for its fiscal second quarter ending in April, forecasting earnings of 88 to 91 cents a share, below the 95 cents per share analysts were expecting.

--Written by Olivia Oran in New York.

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