Hewlett-Packard (NYSE: HPQ), an arch competitor of Dell (NASDAQ: DELL), reported Q2 earnings on Tuesday. Looking through the release, I see quite a few things to like about the H-P story.

Revenues increased 11% to $28.3 billion. This increase was aided by international sales and the weak dollar. On an adjusted basis, earnings per share increased 24% to 87 cents. Furthermore, the adjusted operating margin increased 100 basis points to 10%. Cash generated from operations was $4.8 billion during the quarter, which the release categorized as a record statistic. Cash flow is one of my favorite metrics, and I love it when it is doing well. In fact, according to the transcript of the conference call at Seeking Alpha, the six-month operational cash-flow figure had increased 92% over the comparable time frame one year ago, and free cash flow had more than doubled for the same period.

Honestly, it seems like H-P is managing itself very skillfully, leveraging its various brands in the PC sector to great effect. Guidance calls for adjusted earnings of $3.54 and $3.58. This means that, in my opinion, H-P's stock isn't too expensive. It's also trading away from the 52-week high, which is another positive. Of course, the big story surrounding the company at the moment is its announced acquisition of Electronic Data Systems (NYSE: EDS). As Tom Taulli has observed, the EDS buy is logical. Combining H-P's expertise at providing technologies to the PC world with the services portfolio provided by EDS will most likely make HP an even bigger force, and it could give a behemoth like IBM (NYSE: IBM) new challenges.