Hewlett Packard's FQ3: Glass Half Empty?

is set to report fiscal third-quarter earnings Wednesday while a polarized analyst community hasn't budged in months. At least 13 analysts rate the shares at Buy or Strong Buy while 20 maintain a Hold; a breakdown that hasn't changed since at least May. Results Wednesday aren't likely to surprise and one analyst with a Hold said trends in free cash flow will be key to driving the company's share price. Credit Suisse's Ji Park expects 2014 free cash flow to drop more than 17 percent to $7.5 billion, from 2013's $9.1 billion. But a gradually declining debt load enables Hewlett Packard to use half that amount for share buybacks, Park said Tuesday. The company's growth in revenue and earnings has been generally flat in recent quarters as the company struggles with a lackluster market for personal computers and falling demand for its business services. In May it said it would cut an additional 11,000 to 16,000 jobs in addition to the 34,000 announced in 2012. Total employment is about 317,000. Mizuho's Abhey Lamba said the layoffs should boost cash flow, but the company is in a multiyear restructuring plan that offers little upside to the shares until sustainable revenue growth materializes. Relative strength in the company's low-margin PC business should help it hit revenue targets, while earnings will be little affected, Lamba said, maintaining a $35 target. Despite negative reviews in some quarters, Hewlett Packard is the "top pick" for Deutsche Bank's Sherri Scribner. Its five-year turnaround plan is going well and "continued execution will be the key to further stock upside," Scribner said in a research note Tuesday. Scribner maintains a Buy and $40 target. Likewise Pacific Crest's Brent Bracelin maintains the same upbeat rating and target and says cost cutting, a turn-around in business services and decreasing competition in the market for servers will fuel a continued recovery. Wall Street expects second-quarter earnings of $0.89 cents a share on revenue of $27.01 billion.