MARK HURD IS

about to get his report card.

Come Thursday after the market close, shareholders will spend as much time grading the performance of Hewlett-Packard's chief executive as they'll spend poring over the company's fiscal fourth-quarter results. That's the price you pay when you're known as a turnaround artist.

No-nonsense Hurd, who whipped NCR into shape, was tapped to take over for the ousted Carly Fiorina in April. His mandate was to steer the sprawling computer and printer company onto a more profitable and higher-growth road. Since then, quarterly reports have assumed the air of a midtern exam and a tough one, at that. H-P is a Silicon Valley stalwart that books around $80 billion in annual revenue.

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So far, indications out of H-P's hallowed garage have been encouraging. In July, Hurd announced a six-quarter reorganization plan to simplify the company's structure and reduce costs, both of which had become unruly after the 2002 acquisition of Compaq. The plan, which called for the elimination of 14,500 jobs, or 10% of the company's work force, aimed to save $1.9 billion annually. The strategy has been executed well thus far, according to market watchers.

Scruggs doesn't own shares of H-P personally; the stock is held by Bragg Financial Advisors' clients, as well as the Queens Road Value Fund. Bragg Financial doesn't do investment banking.)

Others share that sentiment, which is why analysts have solid expectations for H-P's fiscal fourth quarter ended Oct. 31. Consensus estimates call for a 12% rise in earnings and a 6% bump up in revenue from a year ago. Since Hurd came on board, the company has managed to top analysts' expectations, and some think this could be another such quarter.

H-P's printer division, a laggard when Hurd assumed the CEO job, is expected to show improvement, as is the server business. And its PC unit typically a weak performer is expected to deliver solid results as well. Perhaps this isn't such a surprise, though, since heavyweight computer champ

Dell

Beyond the quarter-to-quarter fluctuations, H-P remains a company that's trying to transform itself. Comparisons to IBM are not new, of course. Louis Gerstner Jr. shook up Big Blue in the mid-1990s, remaking it into a services and systems powerhouse that more than a few tech companies have since tried to emulate. Becoming a one-stop shop for everything, particularly services, was one of the rationales behind H-P loading up its plate on Compaq. That, of course, proved to be a difficult meal to digest.

Optimists, myself included, argue that the pieces are now in place. The company has a good lineup of printers and servers, and it's strengthening its services business. That's not to say that certain product lines couldn't be pared down. In the past, some market watchers have called for H-P to jettison its PC division altogether. That might not be a bad idea down the road, but a sale doesn't strike me as quite right now, considering the incremental industry gains that can be made at Dell's expense. At the very least, this is an ideal opportunity for H-P to doll up its computer segment for potential future suitors.

H-P is also quietly making strategic acquisitions. In August it completed the $230 million purchase of Scitex Vision, Scitex's industrial printing business. Pushing harder into industrial printing and imaging, where there's less competition and better profitability than consumer printing, makes sense, says Bragg Financial's Scruggs. H-P also announced it would snap up software makers Peregrine Systems for $425 million and tiny, privately held Burlington, Mass.-based AppIQ for an undisclosed sum to beef up its software offerings again, echoing IBM's moves.

Back in May I expressed cautious optimism that Hurd would effect some positive change for H-P. After six months and a 26% rally in the shares, I think it's safe to say the new CEO has been a welcome addition to the company. Despite the stock's impressive performance, it trades at only 13 times next year's earnings, less than the Standard & Poor's 500 price/earnings ratio of 15. Taking long-term earnings growth into consideration, the stock carries a price/earnings-to-growth, or PEG, ratio of 1.56, which is comparable to IBM's, but lower than the broader market's.

Sure, the easy money from H-P's management change and reorganization has been made. But Hurd has just begun. Thus far, I give him an "A."