(FORTUNE Magazine) – Why doesn't anyone believe Carly Fiorina? She has recently declared--loudly, frequently, and in the strongest possible words--that the controversial $19 billion merger of Hewlett-Packard with Compaq in 2002 is finally a success. "The decision to have done the merger in the first place has now been vindicated," she told FORTUNE. "The strategy has been vindicated. The power of the portfolio has been vindicated." It's a message she's been delivering repeatedly in media interviews and to Wall Street. Fiorina's not just talking up HP. She's also been busy bashing archrivals IBM and Dell, and calling on HP's detractors to focus on "the facts." IBM, she delights in pointing out, loses money in its semiconductor business. Dell, she says, is "stuck" in the PC business, hamstringing its growth prospects.

Watch what's been going on at HP, however--and witness Wall Street's reaction--and you get a slightly different picture. In fact, 18 months after the merger closed, Fiorina is tinkering with the organization, creating a "technology solutions" group that makes HP look an awful lot like the way IBM is organized. The company is playing catch-up with PC competitors Gateway and Dell by planning to enter new consumer-electronics markets, like flat-screen TVs and MP3 players. And seven top-level managers--members of the dream team Fiorina selected from the pre-merger ranks--have left within the past three months. Some, like HP veterans Susan Bowick and Webb McKinney, are retiring. Others, including ex-Compaq managers Howard Elias and Mary McDowell, have joined other companies (EMC and Nokia, respectively). One key Fiorina deputy, operations chief Jeff Clarke, quit suddenly without giving a reason.

In terms of the bottom line, at least one analyst, Toni Sacconaghi of Sanford C. Bernstein, argues that if the Compaq merger hadn't diluted the stock, HP's core printer business would have been able to earn more per share. That, merger-battle watchers will recall, was the primary argument of the opposition championed by scion Walter Hewlett. Indeed, HP's critics contend that while the bottom line has benefited from a whopping $3 billion in cost cutting, HP's underlying growth remains unimpressive.

There is, however, no question the situation at HP is vastly improved from a year ago, when HP's PC unit and its business that sells hardware to big companies were both losing money. In the fiscal fourth quarter the two divisions eked out a combined operating profit of $127 million, on $10 billion in revenues. HP's printer division continues to lead the industry, generating profits of $1 billion and accounting for most of HP's total in the quarter. HP also pleasantly surprised investors, reporting earnings per share that beat Wall Street's expectations by a penny.

But investors have treated the upswing at HP in a curious manner: They've ignored it. HP's stock, which trades at a significant discount to Dell's and IBM's, hasn't budged, even when Fiorina promised analysts in December that long-term earnings growth would be greater than 20%--a growth rate several percentage points above Wall Street's current consensus.

Wall Street's indifference points to a larger issue: HP has a credibility problem. It has missed performance targets in three of the past six quarters, prompting analysts to label it a "show me" stock, especially regarding long-term growth. "Why set that high a bar?" wonders Goldman Sachs analyst Laura Conigliaro.

Fiorina isn't helping matters. She boasted in a recent CNBC appearance that HP "leads in every product category, every geography, and every customer segment in which we participate." After combining with Compaq, HP is indeed the market-share leader in numerous categories--but not in servers, where IBM leads by revenue, 31% to 28%, according to IDC. Countering the observation that HP is experiencing executive flight, Fiorina says that only 1.7% of executives at the vice president level and above have left HP since the merger, adding, "That's a pretty small percentage." It's small but also meaningless. When pressed, an aide admits the number is actually higher, but because of title changes since the merger, it's impossible to say by how much.

To Fiorina, the focus on HP's industry positioning and executive shuffles are unfair and yet another example of how the world is tougher on HP than it is on her competitors. She argues that if only people would focus on the facts, HP would be perceived as the clear winner. "I'd rather have my hand than anyone else's in the industry right now," she says. If only Wall Street would get in the game.

--Adam Lashinsky