Computer sales have been tanking for months, and no one was expecting big things Wednesday from the No. 1 PC maker, Hewlett-Packard (HPQ).

Still, the company was able to beat Wall Street's low earnings expectations for its fiscal third quarter, reporting $1 a share. Analysts only expected 98 cents. But the company missed on revenue, reporting a 5% drop to $29.7 billion compared with the $30.1 billion analysts were looking for.

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HP also lowered its guidance for its full fiscal year. Now, it expects to earn $4.05 to $4.07 a share, which was at the low range of its previous guidance. Investors fled the less-than-stellar results, pushing shares of HP down nearly 5% in after-hours trading to $19.47.

After a deluge of bad reports from Dell (DELL), Acer and other computer makers, HP's weak quarter was no surprise. The 800-pound gorilla in the company's numbers was a $10.8 billion charge mostly related to its ill-fated 2008 purchase of outsourcing giant Electronic Data Systems Corp. That buy, a $13.9 billion deal, was a huge mistake. Companies aren't looking for huge outsourcing partners anymore, and the business spiraled.

Adding that charge into the mix put HP's quarterly loss at $8.9 billion, the biggest in its history. PC sales dropped by 10% from a year earlier, which the company said was due to price competition, a shift to tablets and phones and consumers that are waiting for the new operating system from Microsoft (MSFT), called Windows 8, in October. (Microsoft owns and publishes Top Stocks, an MSN Money site.) 

As Jeff Reeves wrote earlier Wednesday, HP and Dell have been unable to adapt in the consumer (and, increasingly, the enterprise) shift from traditional desktop PCs to tablets and other mobile devices. HP has suffered from a string of CEOs who each brought very different strategies and directional shifts. The latest CEO, Meg Whitman, is asking investors for patience as she implements a multi-year overhaul.

"We're making decent progress despite the headwinds," Whitman said in a statement. "During the quarter we took important steps to focus on strategic priorities, manage costs, drive needed organizational change and improve the balance sheet."

The question investors are struggling with is whether this massive change will bear any fruit when it's very apparent that HP's heyday is long gone. Some analysts are pressing the company to break in two, with the ailing PC business on one side and the more profitable business stuff -- servers, storage and software -- on the other.

"Can any CEO lead such diverse businesses with different technology and distribution requirements? The complexity must be overwhelming," wrote analysts with UBS, who relaunched coverage of HP earlier this month with a "sell" rating and a $16 price target. "In terms of marketing, what does the HP brand stand for since being all things to all people means standing for nothing?"

The comments were harsh, but an accurate reflection of the identity crisis that HP and many others in the PC industry are finding themselves in. There's no easy way to shift into the new era of mobile computing; the road is going to be bumpy and, for some, a dead end. The troubles at HP and Dell will continue for some time.

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