Shares of computing giant, and Dow component, Hewlett-Packard (NYSE: HPQ) plunged 6.4% overnight, thanks to a dismal third-quarter report. The stock has now lost more than 30% of its value in 2012, lagging far behind its Dow peers. HP is trading at levels not seen since 2004.

I'm not exactly shocked by this sad turn of events. Preparing for this report, I told you that HP would disappoint again. The company is chasing too many markets at once under CEO Meg Whitman, making it impossible to dominate any of them. "HP's margins are falling to pieces," I said. "Sales are slowing down in spite of big, splashy acquisitions. That's a terrible combination."

Proof, meet pudding
That's exactly what happened again this quarter. Sales fell 5% year over year to $29.7 billion, just below the analyst target at $30 billion. Adjusted earnings swooned 9%, landing exactly at the $1.00 platform where HP's updated guidance painted its crosshairs.

Whitman didn't even try very hard to put the usual positive spin on these numbers. Instead, she pointed out that HP is going through a "multi-year turnaround" and making "decent progress." Not "fantastic" or "ahead of schedule, under budget," but just, you know, "meh."

Like Dell (Nasdaq: DELL) reported earlier this week, consumers are leaving HP's PC market in droves. But Dell only sells computers, while HP also took a 23% rabbit punch to its consumer printer unit volume. So, the sector slowdown is hurting HP more.

Where's the silver lining?
The few segments showing any promise in the form of rising sales fell squarely on the enterprise side. This included networking equipment, commercial-grade printer systems, and enterprise software. Operating margins fell across the board, again excepting the printing group, and HP's oft-overlooked financial services.

Under Whitman's rule, HP continues its eternal quest to carbon-copy IBM's (NYSE: IBM) proven model of success, adding software and services to the old core of hardware sales. But the company is hardly alone. Dell is doing the same thing, but seems more willing than HP to get there by taking drastic action. Cisco Systems (Nasdaq: CSCO) attacks the same strategy from a networking perspective, and that multi-year process only recently started to bear fruit. Then there's Oracle (Nasdaq: ORCL), swimming the other way by adding hardware to its huge software footprint -- and fumbling away most of the server opportunity along the way.

The road not taken
If Whitman really is serious about her Big Blue game plan, she needs to dump the doomed consumer assets into a separate company, or sell them to the highest bidder. But that's not happening.

When asked about potential spin-offs on this earnings call, Whitman held the door open for small sales, but firmly locked to bigger deals: "They wouldn't be big divestitures by any stretch of the imagination, but we have lots of little initiatives buried throughout this company," she said. So just forget that big idea, okay?

I wouldn't be surprised if HP lost its seat at the Dow 30 table soon. This is hardly the blue-chip of yore, but a shrinking and weak competitor amongst far stronger rivals. The 2.7% dividend yield may look tempting, but is simply a side effect of sliding share prices. There are far stronger income generators available, such as The 3 Dow Stocks Dividend Investors Need. Grab that report while it's still free, Fool.