Today: Hewlett-Packard's (HPQ) quarterly losses weren't as bad as feared, as CEO Meg Whitman says a turnaound is gaining traction. Also, Elon Musk's positive outlook can't save Tesla stock from sinking, and Apple's (AAPL) renegade investor tries to drum up support.

HP earnings beat expectations

Hewlett-Packard reported a continued slump in quarterly sales and profits Thursday, but there were encouraging signs that the beleagured company is slowly turning itself around.

Though HP's profits were down 16 percent year-over-year, the numbers weren't nearly as bad as analysts had feared. The Palo Alto tech giant posted earnings of 63 cents per share on sales of $28.4 billion, significantly better than expectations of 38 cents per share on sales of $27.8 billion. The company also raised its estimates for second-quarter profits -- between 80 and 82 cents per share, topping analysts' 77-cents-per-share projections -- citing cost cuts attributed to layoffs and corporate streamlining as well as growing demand for its data-center services.

"While there is still a lot of work to do to generate the kind of growth we want to see, our turnaround is starting to gain traction," CEO Meg Whitman said in a statement. "Our primary focus is to deliver on the full year outlook, and I feel good about the rest of the year." HP is in the midst of a five-year recovery plan by Whitman, hoping to refocus its business away from sinking consumer PC and printer sales and toward business enterprise products.

Whether gaining faith in the company's direction or simply relieved by a lack of disappointing news, investors seemed encouraged.

"The hope is that this is the floor and they've gotten a grip on the business," Shaw Wu, an analyst at Sterne, Agee & Leach, told Bloomberg News. "They're giving guidance that actually makes sense."

The report was one of the few rays of sunlight to penetrate the dark cloud hovering over HP for the past year, in which its sales have flattened, its stock has plunged to 10-year lows and it absorbed an $8.8 billion write-down on its potentially criminally overvalued $11 billion purchase of Autonomy.

HP shares were up nearly 6 percent in after-hours trading, after rising 2.4 percent, up 40 cents, to close at $17.10, during the day.

Tesla shares hit pothole after earnings report

Tesla shares tumbled nearly 9 percent Thursday, a day after the electric car-maker said profitabilty is in sight after reporting another quarterly loss.

The past two weeks have been tumultuous for Palo Alto-based Tesla Motors (TSLA), whose CEO, Elon Musk, has been engaged in a high-profile war of words with the New York Times reporter who wrote a scathing review of the company's flagship Model S sedan. After the closing bell Wednesday, the company announced it lost more money that expected in the fourth quarter of 2012, as it fell short of Model S delivery goals. Musk, however, said production has been ramped up and that he expects to turn a profit for the first time this quarter.

"We really have high confidence that we will have a profitable first quarter," Musk said. "This is the first quarter that we have been at our target production rate. We're going to be profitable, and I think that's a pretty big deal."

But Musk's words were met with skepticism from analysts and investors: Merrill Lynch dropped Tesla's rating from "neutral" to "underperform" on Thursday, and Goldman Sachs analyst Patrick Archambault cut his earnings forecasts for 2013-2015 by up to 60 percent, according to the Wall Street Journal. Tesla shares immediately started slipping in after-hours trading after Wednesday's announcement, and the slide continued Thursday, finishing down $3.38, or 8.77percent, to $35.16. It was the company's biggest one-day drop in more than a year.

"Investors are now beginning to focus on what sustainable demand is beyond 2013. The question remains: how big is the addressable market?" Adam Jonas, a Morgan Stanley auto analyst, wrote in a note Thursday.

Others agreed. "Frankly the stock had reflected a lot of optimism heading into the earnings call. Much of the value is based upon expectations for growth for the company," said Ben Schuman of Pacific Coast Securities, according to a CNN report. "It's going to be more volatile than a traditional auto stock, that's for sure. It's more of a tech stock."

Still, some are still bullish on Tesla's future. "The stock is off, but I think that will be short-lived," Maxim Group analyst Aaron Chew told the Merc's Dana Hull on Wednesday. "It was a great report. Reservations were really strong in the fourth quarter, and the demand trends are really encouraging."

Apple shares dip, but sky's the limit for Google price targets

Stocks fell for the second day in a row Thursday, as investors worried about continued weak economic data and fears that the Fed may slow its bond-buying program. Tech stocks took the brunt of the losses, with both the tech-heavy Nasdaq and Silicon Valley 150 index falling more than 1 percent.

While Hewlett-Packard shares rose 2.4 percent on anticipation of its earnings report, its hardware comrades didn't fare nearly as well: Cisco (CSCO) and Juniper Networks both fell more than 1.6 percent, and Oracle (ORCL) and Intel (INTC) both dropped more than 2 percent. Social networks fared even worse: Facebook sank more than 4 percent, Zynga fell 3.9 percent and LinkedIn was down nearly half a percent.

Apple shares dipped $2.78, or 0.62 percent, to $446.07, as renegade investor Mark Einhorn tried to muster support for his plan to force the Cupertino tech giant to share more of its vast cash hoard with shareholders. During a conference call, Einhorn, the founder of Greenlight Capital, laid out his plan for Apple to issue "iPrefs," a new class of dividend-bearing preferred stock, to be issued free to shareholders. Einhorn has filed a lawsuit against Apple, but has so far drawn little support from other shareholders. The issue will come to a head at next Wednesday's Apple shareholders meeting.

Google (GOOG) was one of the few tech companies to eek into positive territory, ending the day up 0.39 percent, or $3.07, to close at $795.53, after receving price target increases by three major analysts, including Bernstein Research's Carlos Kirjner, who raised his target to $1,000 on the basis of strong mobile growth forecasts.

Silicon Valley tech stocks

Up: Google, HP, Netflix

Down: Apple, Oracle, Intel, Cisco, eBay (EBAY), Gilead, Yahoo (YHOO), VMware, Facebook

The tech-heavy Nasdaq composite index: Down 32.92 , or 1.04 percent, to 3,131.49.

The blue chip Dow Jones industrial average: Down 46.92 or 0.34 percent, to 13.880.62.

And the widely watched Standard & Poor's 500 index: Down 9.53, or 0.63 percent, to 1,502.42.

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services.