Last week HP’s stock (HPQ) hit the lowest point since october 2002, finally reaching $14.3 a share after a year of constant pitfalls. The drop occurred after news that HP CEO Margaret Whitman projected a drop in next year’s profit. Since last year, HP’s stock has decreased nearly 50%, and investors’ outlook seems to be getting worse by the minute.

Is HP in the same category as companies like Dell and RIM, who are suffering from increasing competition and a lack of innovation for outstanding products? The answer seems to be a glowing YES. HP offers acceptable printers and computers, but in the computer industry, being 2nd is as good as being last!

So how can HP turn around it’s strongly downward trend? Their current strategy seems sound; investing in R&D in order to make more captivating products at a competitive price.  Whitman expects the benefits of such investments to surface by 2016, at which point HP ‘should’ be as innovative as its competitors Apple and Lenovo.

HP is currently valued at $28.6 Billiion, so it seems quite likely they will survive the diminishing returns in the short run. The real question is whether HP will survive in the long run. If you take Whitman’s word on it, investing in HP may be worthwhile if they manage to regain their competitive edge. The stock traded upwards of $25 a share just 6 months ago, and it could very well reach it’s traditional highs of $50 a share. In the mean time, HP is offering a healthy 3.58 dividend yield, which may make your wait even more worthwhile.