Since then, HP stock has climbed another 13%. Some are using this opportunity to take their shots -- and I don't have a problem with that. HP has made some meaningful strides over the past couple of months.
But I'm not ready to back away from my assessment. HP is overhyped.
HP's core business remains in decay. And despite the optimism of CEO Meg Whitman regarding personal computers, PCs are no longer a growth industry. In the markets that do matter, like tablets and smartphones, HP does not have a product to sell. So what's all the commotion about?
Was the stock too cheap several quarters ago? An argument can be made that it was. Plus, the embarrassment and scandal surrounding the botched deal for Autonomy certainly didn't help. So the stock had been punished for various reasons, not all of which aligned with HP's fundamental value.
At best, HP shares have been correcting upward. In terms of real growth, HP has produced very little to support the stock's 50% gains in the trailing 12 months. This is a distinction that needs to be made. Let's be honest with ourselves. How much longer are we going to cheer "less bad" results?
For instance, in the recent quarter, revenue was down 1% year over year. The Street applauded the fact that this was higher than estimates. Given how bad the year-ago quarter was, there was a low bar set. Plus, there's no question too much was made of the 4% increase in the PC division. Who's buying them?
Likewise, this notion that PC sales for major vendors have bottomed is grossly premature. According to data by research group Gartner, PC sales are still on the decline. And even if we were to assume a bottom has been reached, what sort of track record have we seen to believe HP is better positioned than Lenovo (LNVGY) to secure the market?
Let's not forget, although Dell may have gone private, the company is still a dominant enterprise power. Along those lines, Apple (AAPL) has begun to grow incremental share. And then there's Google (GOOG). Chromebooks were once considered just for play, but Google has put a strong marketing plan behind these devices, suggesting that Google itself is not playing around.
HP, on the other hand, had remained steadfast about not wanting to sacrifice margins in PCs to compete on price. But the company's hand has been forced. Some lower price points helped with the recent sales volume.
The question you should be asking is this: amid price cuts, how did HP generate $3 billion free cash flow for the quarter?
The answers are simple. Cost reductions, layoffs and constant restructuring. Again, I don't have a problem with these. The company did what it had to do to generate a profit. But if you're going to send me emails reminding me of how wrong I was and how "dominant" HP has become, let's at least agree on what the word "dominant" means. It doesn't mean shrinking.
There had been no real growth. And I'll go even further. At this point, it's a mistake for investors to assume that a return to growth is possible. The fact is, there's still quite a lot of work for Whitman to do before she can fully realize this turnaround. And I have concerns about the effect of competition on any growth plan Whitman can come up with.
As far as the stock is concerned, The Street has corrected its overreaction. That's the good news. But until growth truly returns to HP, I don't see much upside from the $30 range.
At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.