Hewlett-Packard (NYSE: HPQ) reports third-quarter results after Wednesday's closing bell. Stock prices have plunged 22% in 2012, and shares are trading for just eight times trailing earnings or less than five times forward estimates today.

Is this quarter the pogo stick on which HP bounces back to full health, or will the company continue to fall apart? Let's find out.

Word on the Street
Wall Street's analysts expect earnings to shrink by 11% year over year to $0.98 per share. Sales should wane 3.5% to $30 billion. The earnings target is higher than management's original guidance range, which ran from $0.94 to $0.97 per share, but below the recently updated $1.00 projection.

The company is knee-deep in a huge restructuring effort. HP expects to slash 27,000 jobs by the end of 2014 to generate annual cost savings of up to $3.5 billion. Granted, that's a drop in the very, very large bucket for a company with 324,000 employees and $114 billion in yearly operating costs, but still a very significant project.

CEO Meg Whitman now says that she wants to simplify HP's sprawling business model. "We're building HP into a more efficient and effective organization that can survive the test of time," she said three months ago. This new, more efficient HP is structured around three operational "pillars," namely cloud computing, data security, and information management.

Whitman aims her payload at three red-hot markets, but it's not clear to me that she has the necessary tools. HP has been a pretty pure-play hardware company for years, and almost everything Whitman wants to do would involve a heavy software component. Her predecessor, Leo Apotheker, was basically fired for wanting too much software. Without serious support from the board, I don't see how Whitman's fate will be any different.

The echo chamber
And I'm not alone in my pessimistic musings. HP hasn't received a fresh buy rating since last November, but UBS published a sell thesis just a couple of weeks ago. The firm would like to see HP breaking up into separate enterprise and end-user businesses.

That's almost the only way to compete effectively with IBM (NYSE: IBM) in the enterprise market nowadays. IBM is also under new management, but keeps on ticking with robotic precision while many rivals cough and sputter in the same markets. Consumer products like entry-level printers and laptops are nothing more than a low-margin distraction for the more profitable business-class products. Splitting into a business-focused Hewlett and a consumer-oriented Packard might make me invest in the Hewlett stock.

The only better idea I can come up with would be to merge HP with software giant Oracle (Nasdaq: ORCL), which would instantly create exactly the range of top-to-bottom solutions that Whitman so desires -- and Oracle CEO Larry Ellison does, too. IBM would be shaking in its Big Blue boots if that were to happen.

Let's get real!
But neither an Oracle merger nor a less ambitious break-up is in the cards right now. I'd love to hear Whitman dropping hints that HP is looking at these drastic measures, but holding my breath would be bad for my health.

So we should expect earnings very close to the updated $1.00 party line, and I'll listen for updates on Whitman's evolving business plan. In the meantime, I see no reason to abandon my bearish CAPScall on this stock. HP's margins are falling to pieces. Sales are slowing down in spite of big, splashy acquisitions. That's a terrible combination.

HP is one of the smallest and weakest stocks in the Dow. Serious dividend investors should take a long, hard look at three Dow stocks not named Hewlett-Packard right now.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of International Business Machines and Oracle. The Motley Fool has a disclosure policy.

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