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HP: Whitman Continues to Prove Why She Was the Right Hire

Stocks in this article: HP MSFT INTC

NEW YORK ( TheStreet) - More than any other company on Wall Street, I've gone out of my way to give the benefit of the doubt to computer and printing giant Hewlett-Packard (HPQ), regardless of its mistakes. What has always appealed to me about HP is its broad portfolio of products and services that spans every nook and cranny of the corporate enterprise.

Not only is HP the world's No. 1 PC maker by a decent margin over Dell (DELL) and Apple (AAPL), but it is also the leader in printing, besting Lexmark (LXK), and growing its share in networking components to become a rival of Cisco (CSCO). So the question has always been, why has it not been able to get its act together?

However, on Wednesday, the company reported better-than-expected results for its second-quarter, reminding investors that it is under new leadership and things are about to change. HP reported earnings per share of 98 cents a share on revenue of $30.7 billion -- beating analysts' estimates on both the top and the bottom line. Wall Street was expecting EPS of 91 cents on revenue of $29.91 billion.

The numbers were good, but not great. As much as I appreciate the progress and the strides that HP continues to make ever since Meg Whitman took over as CEO, I continue to keep things in perspective -- whether good or bad. Wall Street reacted favorably to the news and the stock shot up 10% during after-hours trading.

I think an earnings beat of any kind in this market climate deserves to be rewarded. However, I can't help but notice that on an annual basis, both revenue and EPS was actually down 3% and 21% respectively.

Be that as it may, it took excellent execution by Whitman under a considerable amount of pressure to deliver the performance that it did -- particularly in light of Dell's recent disappointment and Cisco's own less-than-stellar forecast for the coming quarter. From that standpoint, HP opted to play it safe and not divert too far from its rivals.

For Q3, it is forecasting earnings in the range of 94 cents to 97 cents a share -- slightly lower than the $1.02 a share projected by analysts. For the full year fiscal 2012, HP expects non-GAAP earnings of $4.05 to $4.10 per share.

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