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[video] Quick Take: HP's Turnaround Is Still Turning

Stocks in this article: HPQ IBM CSCO

NEW YORK (TheStreet) -- Hewlett-Packard (HPQ) stock is up nearly 8% on a better-than-expected fourth-quarter earnings report. Analyzing the report and deciphering the turnaround story are TheStreet's Debra Borchardt and Managing Editor James Rogers. 

Despite the earnings report containing positive numbers and good results, Rogers wasn't convinced of the turnaround. While revenue beat expectations, it was still below last year's figures, showing a year-over-year decline. 

Rogers added the company will likely struggle in China -- something management admitted to last quarter -- just as Cisco Systems (CSCO) and International Business Machine (IBM) have lately as well. 

But HP's gain in PC market share has to count for something, right? Not necessarily. While it might be good to gain market share, Rogers suggested the bigger question investors should ask is, at what cost? 

As market share improves, margins are likely to compress, which isn't good for HP. The turnaround is moving in the right direction, he stressed, but it is far from complete. 

He complimented CEO Meg Whitman on the work she has completed so far and added she has vastly improved the balance sheet. 

So although the stock is higher and approaching 52-week highs, Rogers concluded the turnaround is a multi-year story, and is still in the beginning chapters. 

-- Written by Bret Kenwell in Petoskey, Mich.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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