Given the performance of Hewlett-Packard's share price - which climbed more than 13 per cent the day after the company released its most recent financial results, and has remained near its 52-week high ever since - investors seem to think the computer and electronic-products maker is finally out of the woods. But is it?

There's no question that things appear to be looking up for Hewlett-Packard, which has spent the past three years not only absorbing Compaq Computer but trying to justify the billions of dollars it spent acquiring the computer maker under former chief executive Carly Fiorina. HP has also been trying to compete with discount computer seller Dell on the one hand and corporate services behemoth IBM on the other.

The initial reaction to the company's latest quarterly report - the first under new CEO Mark Hurd - was largely favourable. HP beat analysts' expectations on both revenue and profit, and said some positive things about the outlook for several of its divisions over the next couple of quarters.

In particular, analysts who follow the company were encouraged by the fact that HP managed to maintain relatively healthy profit margins, despite the rampant price competition in the industry.

In fact, both Dell and Gateway mentioned in their recent quarterly outlooks - in which they lowered expectations - that they were dealing with strong competition in both PCs and corporate servers, and Gateway specifically mentioned HP by name.

The fact that HP was able to mount that kind of competitive assault, particularly on an industry leader such as Dell, and still maintain a healthy margin was a very positive sign, analysts said.

Excluding a one-time charge related to the "repatriation" of US$14.5 billion ($20.8 billion) in foreign earnings (under a special policy instituted by the US Government), HP reported a profit of 36c a share. That was higher than the consensus estimate of 31c expected by most analysts, and well ahead of the 24c the company made in the same period a year earlier. HP's revenue climbed to about $21 billion.

In addition to its profit margins, there were a number of areas of HP's business that looked better than they have in a while. For example, the personal systems group - which includes computers - saw sales rise by 8.2 per cent, and its operating profit climbed to $163 million from $23 million a year ago.

Several brokerage firms upgraded HP in the wake of the company's results, including Banc of America, Bear Stearns and Prudential. Banc of America raised the stock to a "buy" from "neutral," and said it should have continued upside. The shares have risen almost 50 per cent over the past year, from $18 last August to a recent close of $27.