THE DAY AHEAD: H-P is back ... almost

Is Hewlett-Packard (NYSE: HWP) back? Well, kinda. Sure the stock will go up after H-P creamed second quarter estimates and said it had strong order growth. But until H-P actually delivers that double-digit sales growth it's promising the comeback story isn't complete.

First let's cover what has Wall Street so happy this morning. H-P delivered second quarter earnings of 88 cents a share, a whopping 8 cents a share better than the First Call consensus. Executives were bullish about upcoming quarters and analysts will follow with upgrades.

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But like the first quarter and the fourth quarter, H-P's revenue growth wasn't dazzling. Net revenue was $12.4 billion compared to $12 billion a year ago. Sales were at the top range of what analysts expected, which wasn't much.

Earnings were up 34 percent from a year ago, but that's a hollow comparison. H-P missed estimates in the same quarter a year ago because expenses were bloated.

Lewis E. Platt, CEO of H-P, summed it all up. "This is the third consecutive quarter that we've exceeded street expectations," said Platt. "We executed well and turned in an excellent bottom line, and we're encouraged by improved order growth of 10 percent. Clearly, our challenge is to convert order growth into stronger growth in revenue."

On the conference call, officials were bullish about that order growth. CFO Robert Wayman said those orders will translate into double-digit sales growth of 10 percent to 13 percent in the second half. The sales expectations were even "reasonable," said Wayman. That's pretty heady stuff from a company that has had flat sales for more than a year.

So what's the problem? H-P has fallen short of delivering before. Three quarters of better-than-expected expectations don't erase two years of broken promises.

Still, there's a lot for H-P investors to be excited about. H-P isn't so dull anymore. The company has a new attitude, is spinning off its measurement business and plans to replace Platt. H-P's E-services plan, the company's attempt to be an Internet-centric company, is raising eyebrows as the company gives away mainframes and makes other unconventional moves.

Ann Livermore, president of H-P's enterprise group and top internal candidate for CEO, told ZDNN that H-P's moves aren't a case of "desperate times call for desperate measures," but the product of a new innovative H-P.

But it all comes down to the top-line growth and whether the "new" H-P can deliver it. Wall Street will bet the growth is coming, but H-P has disappointed before. Third quarter revenue growth will tell the tale.

Is H-P back? Almost.