vacancies advertise contact news tip The Vault
It's EPIC GIVEAWAY TIME! NEW PRIZE EVERYDAY! [x]
facebook rss twitter

HEXUS.sharewatch: carnage for HP

by Scott Bicheno on 22 August 2011, 12:03

Tags: Hewlett Packard (NYSE:HPQ), Google (NASDAQ:GOOG), Nokia (NYSE:NOK)

Quick Link: HEXUS.net/qa6xs

Add to My Vault: x

Last week tech giant HP announced it was looking at a wholesale retreat from the consumer computing market - revealing its acquisition of Palm to be a complete bust and opening the door to the sale of its market-leading PC division.

These bomb-shells were delivered alongside - and presumably meant to justify - the announcement that HP plans to spend over $10 billion to acquire UK enterprise software company Autonomy, as part of a wholesale reinvention of HP as a business software and services operation.

There are many reasons to applaud the thinking behind such a move - the business market offers far higher margins than the consumer one (unless you're Apple) - but investors seems to be appalled with both the way it was delivered, and the apparent vagueness and uncertainty of the plans. Accordingly HP's shares fell by a total of 27 percent last week - wiping-out almost $20 billion of shareholder value.

HP wasn't helped by the general macroeconomic conditions being so shaky. A raft of weak economic data coupled with new drama in the European sovereign debt crisis led all markets down last week. The irony is that investor uncertainty caused by excessive sovereign debt has led them to flee equities and into... sovereign debt. Rocks and hard places spring to mind.

Google was also punished for a proposed Motorola acquisition that left many investors scratching their heads. On the flip-side, as soon as Google made its announcement Nokia's shares opened up around ten percent and held onto most of that in spite of all the general panic.

Company Listing Share price 11/7/11 Share price 18/7/11 Share price 15/8/11 Share price 22/8/11 7-day change Market cap (bn)
AMD AMD 6.95 6.43 6.21 5.98 -3.7% 4.11
Apple AAPL 359.71 364.92 376.99 356.03 -5.6% 330.07
ARM ARMH 29.78 27.56 25.65 23.84 -7.1% 10.70
Avnet AVT 32.21 29.75 27.72 24.75 -10.7% 3.78
Cisco CSCO 15.74 15.59 15.99 15.08 -5.7% 82.94
Dell DELL 17.14 16.97 14.87 14.00 -5.9% 26.40
Google GOOG 531.99 597.62 563.77 490.92 -12.9% 158.51
HP HPQ 36.43 35.09 32.32 23.60 -27.0% 48.95
IBM IBM 176.49 175.54 168.20 157.54 -6.3% 188.15
Intel INTC 23.09 22.37 20.65 19.19 -7.1% 101.75
Microsoft MSFT 26.92 26.78 25.10 24.05 -4.2% 201.50
Nokia NOK 6.22 5.54 5.36 5.80 8.2% 22.04
Nvidia NVDA 15.43 14.10 12.88 11.73 -8.9% 7.04
Oracle ORCL 33.94 32.09 27.39 24.78 -9.5% 125.52
Qualcomm QCOM 59.36 54.96 50.50 46.52 -7.9% 78.14
Sony SNE 27.10 27.03 21.49 20.53 -4.5% 20.60
Vodafone VOD 26.75 25.77 27.08 26.23 -3.1% 133.94
Dow .DJI 12657.20 12479.73 11269.02 10817.65 -4.0% N/A
FTSE 100 .FTSE 5990.58 5843.66 5320.03 5040.76 -5.2% N/A
NASDAQ .IXIC 2859.81 2789.80 2507.98 2341.84 -6.6% N/A


HEXUS Forums :: 4 Comments

Login with Forum Account

Don't have an account? Register today!
“..and the apparent vagueness and uncertainty of the plans.” Pretty much nails it, I think; they've achieved more than the usual ambiguity:
1. Sell off PSG
2. And err…
3. …well…
4. …that's kind of all we've got really…
5. …Profit!
Sounds like they are attempting to be another IBM.

They should re-invent the Compaq brand and set it up as a sister company for consumer based produce.
AGTDenton
Sounds like they are attempting to be another IBM.
Trouble with that as a strategy is that it's only IBM who managed it. Even Oracle's tried - and failed. That said, IBM seem to be a lot more choosy about what they acquire and what they get rid of - although I was really surprised when the sold the disk devices out to HGST, (and yes, I know that's moved on again - this time to WD). That said, even now, it's amazing how much of an IBM server (not necessarily the xSeries) is © Big Blue.
AGTDenton
They should re-invent the Compaq brand and set it up as a sister company for consumer based produce.
Hmm, it's pretty much there already - i.e. Compaq brand are the low end products. But don't forget that HP-PSG also does the business stuff, like the laptop I'm currently using. Or were you suggesting that PSG gets rebranded as “Compaq” - in which case I'm going to agree 100%.
Accordingly HP's shares fell by a total of 27 percent last week - wiping-out almost $20 billion of shareholder value.
Hmm, what's the betting that a lot of shareholders - especially the big corporate ones - are seriously wondering if a new CEO might not be a good idea. Just as long as they don't bring back those earlier disasters - especially Mark Hurd. (:puke: or :censored:)
In fairness to that horrific 27% drop, google managed to get over 10% wiped off! The NASDAQ was down over 6% and even darling company Apple dropped 6% too…..

The sale has started ;)