Chris Lau, Kapitall: A quarterly report from Hewlett Packard (HPQ) helped boost shares by 20%. HP is now up 72% in year to date, which would make investors wonder if there is more upside. One strategic shift HP highlighted on its earnings call was its positioning with tablets. The company, which wrote down billions after acquiring Palm, chose instead to sell Android-based tablets. The move was of strategic importance for HP and beneficial, because it reduces its reliance on Microsoft’s (MSFT) operating system. HP also broadens its product base and raises its customer base away from the slowing Windows-based computing market. Shares of HP are performing on par with Microsoft and Dell(DELL). Dell recently reported quarterly results that showed acceleration in the deterioration of PC sales. Dell, whose share price is dictated by privatization efforts, reported sales declining by 2%, while gross margins dropped 1.4% from the previous year, to 20.6%. Notebook sales dropped 16%. PC sales represented 49% of sales. Sacrificing margins to boost sales could be negative for HP in the near term. Higher Guidance HP raised its guidance for fiscal 2013. The company expects to earn $3.50 – $3.60 per share, compared to the consensus estimate of $3.49. Catherine Lesjak, HP’s CFO, said that it expects cash flow will be around $7.5 billion this fiscal year. For the first half of the fiscal year, HP generated $5 billion in free cash flow. This is being achieved despite a drop in revenue and was helped by prudent capital expenditures.New Product Releases HP experienced strong interest for new Android-based products. In February, 2013, the company launched a Chromebook laptop. In the second quarter, the Slate (tablet) was released. It is powered by an ARM (ARMH) chip and retails for $169. In May, the HP Slate Book X2 was released, which could prove more successful than expected. The device is an Android hybrid that is powered by an NVIDIA (NVDA) Tegra 4 processor. Focus on Traditional Servers and SoftwareHP plans to continue its focus on the traditional server market. What is positive for investors is that the company will not be aggressive in boosting sales volumes at the expense of lower margins. Although HP’s entire server segment experienced a 12% drop in revenue, 3PAR now exceeds the $1 billion run-rate in revenue. Enterprise software sales for Autonomy are stabilizing. HP cited that Nippon Airways, which is Japan’s largest airline, chose Autonomy’s Optimost product to analyze online customer experiences.Improving Balance Sheet HP lowered its debt by $1.8 billion. Debt outstanding is now $2.9 billion, which is at pre-Autonomy levels (HP took an $8.8 billion write-down on the acquisition).