Q. I'm a long-time Hewlett-Packard Co. shareholder. Is this stock ready for a strong run? - PR, via the Internet

A. The global reach of this famous information technology firm is powerful, with its personal computers, printers, servers and services likely to post gains in an economic revival.

It has been aggressive in developing and distributing complex new technologies that expand beyond the more limited potential of PC and printer businesses that have become commoditised.

The company's services business, expanded through the acquisition of Electronic Data Services in 2008, is going after a profit center that IBM has dominated. The company's goal is to wrap its hardware in a profitable bundle of software and services.

Shares of Hewlett-Packard are up three percent this year following last year's 43 percent increase. The company earned $2.25 billion in its first fiscal quarter, up from $1.86 billion a year earlier, on cost cuts and rising sales.

It is hyping its upcoming slate computer with the assertion that it will run "the complete Internet" better than Apple's iPad. While H-P notebook computers, desktop computers and servers have bounced back from last year's weak results, the company faces competition from strong rivals such as Dell, Cisco and Oracle.

Sales of H-P hand-held products, including its iPaq smartphone, have been lacklustre. That has led industry analysts to wonder whether H-P has a serious future in smartphones, which many believe are destined to become a larger business than laptops.

The consensus analyst recommendation on Hewlett-Packard shares is between "strong buy" and "buy", according to Thomson Reuters, consisting of 14 "strong buys", 13 "buys" and five "holds".

Mark Hurd, who became CEO in 2005 and added the title of chairman in 2006, aggressively engineered the acquisitions of EDS and 3Com. He is backed by a veteran management team at a firm whose financial health is strong, with plenty of cash flow and a manageable debt load.

Earnings for the fiscal year ending in October are expected to increase 15 percent and rise another 10 percent the following fiscal year. The five-year annualised return is projected to be 13 percent, about in line with the diversified computer systems industry.

H-P recently apologised in China for faulty graphics components in some laptops sold there and offered extended warranties after Chinese authorities launched an investigation of the problems.

Q. What happens when a company does a reverse stock split? Is it a bad sign? - TJ, via the Internet

A. It isn't an especially good sign, since it means the company is going out of its way to try to boost its stock price to attract new and institutional investors.

The firm may believe it needs to enact a reverse split because its stock price has fallen too low to appear viable or that it must avoid being de-listed on a stock exchange.

Many institutional investors and mutual funds have rules against purchasing a stock priced below a minimum level. A number of embattled financial firms, for example, have enacted reverse splits over the past year.

In a one-for-two reverse stock split, you receive one share for every two that you own. So your two $25 stocks become one $50 stock.

"From a value perspective, nothing changes in terms of what you own," pointed out Paul Nolte, managing director of Dearborn Partners in Chicago.

A company's board of directors may declare stock splits without shareholder approval. The reverse split is the opposite of a more typical two-for-one stock split, in which you receive two shares for every one you own because the company is trying to make its shares more affordable.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 North Central Avenue, Suite 302, Phoenix, Arizona 85004-1248, or by e-mail at andrewinv@aol.com

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