Hewlett-Packard aims to offer it all in the tech world, from hardware and servers to technology services to enterprise IT management.
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HPQ... the company with two left feet. Can the management team do ANYTHING right? At this point, I would argue that it barely matters. The stock is so cheap that anything short of disastrous decision making or catastrophic performance going forward should generate a decent return on investment. Plus there is a nearly 3% dividend that should be totally reliable. The easy part, what is wrong: 1) no present tablet offering as tablets start taking over the pc market2) HP's upcoming tablet launch this fall will surely be disappointing. Copying the WinTel model in tablet-world is a surefire mistake.3) printing business in the toilet with no end in sight4) enterprise business struggling5) soap-opera of management & strategy changes and employee layoffs6) smart phones... HP is not even a player as smart phones impinge on the PC business and grow in importance as a business data interface toolThe hard part, seeing the upside:1) as the printing business matures & declines, HP will surely be one of the last players standing. It is still a highly profitable business and any market transition will be very gradual, especially in the business portion of the market which is the bulk of it2) The Windows 8 launch later this year looks very promising and should provide a nice pick-up for the PC division3) HP actually has some solid assets & businesses in the enterprise space so there is certainly upside in enterprise services, software and cloud.I'm in... although not impressed by this company.
Your "what is wrong" totally convinced me, and your "seeing the upside" did not. I don't quite see it as a positive that HP will be one of the last players standing in the printing business. This reminds me of Eastman Kodak, the last player standing in the 35mm film business.
Naturally I salivate when a Dow-Jones company with a reasonable dividend trades at 7-8x earnings and has an 18% payout ratio. But I have to believe that HP is a value trap until I see evidence to the contrary.
My gut tells me that Dell, not HP, is the PC-age brontosaurus most likely to come back to life, but I don't invest with my gut--so I'm staying away from both of them.
Their recent record is a bit ugly. I vote that theyll underperform, but we'll see! In the last section of your post you add, "HP actually has some solid assets & businesses in the enterprise space so there is certainly upside in enterprise services, software and cloud." This could begin to hint at being undervalued! More research is needed, but a modest investment in HP could pay off in the long term.
Yahoo Finance reports estimated 2012 3rd qtr earnings as High of $4.14 and low of $3.96 with 34 analysts reporting. If these are reasonable - and using a hi P/E of 14 and a low P/E of 7 the buy range for HPQ is between
a low of 11.6 (80 % of the current low price) or a low of P/E of 7 times $3.96 (low est of erngs) or $27.7. and the high price potential of 14 times 4.14 or $58.00 . If mgmt can make some reasonable business decisions HPQ appears to be a very good buy . This will take some patient 2-3 years ?