Hewlett-Packard Is Hammermill Paper 2.0
Editor's Note: This video was originally published on Oct. 4.
NEW YORK (TheStreet) -- HP stock was down thirteen percent yesterday. It's down another three percent today, and at a ten year low. I mean, did we get the kitchen sink? Is this enough?
Nokia, Research in Motion, Eastman Kodak, Nortel, Data General, Digital Equipment, Wang, Univac, Control Data, Burroughs, -- there's a long history of tech not keeping pace with other tech. But when you say it and you put the litany out there, it's almost jaw-dropping. I mean, I felt jaws drop all over the country when I mentioned on Squawk on the Street that Hewlett-Packard was having a Kodak moment. But TheStreet.com actually owns some bonds, some Hewlett Packard bonds, and I felt compelled to get rid of them not that long ago, because it just seemed like this is one where the cash flow could erode very quickly. I remember Kodak in the eighties was a powerhouse, had a great balance sheet, bought Sterling Drug and was just throwing off cash everywhere. Eastman Chemical was just so amazing. And you never would have thought what happened to Kodak happened. Things can happen to companies by better mousetraps being built.
Well, so they can't evolve into a consulting business. You think they can't. They're behind there.
Well, maybe they can. But I heard Meg Whitman (HP CEO) loud and clear this morning talk about how they're not going to. 320,000 employees are sticking with the business model, still going with the hardware model. This battle's been won by Apple. A fabulous book on Steve Jobs by Walter Isaacson talks about the closed and open model. The book was written before we saw really the curtain go down on what I regard as being the open model. Microsoft has done everything here. Microsoft is Hewlett Packard. Now Microsoft's competing against Hewlett Packard in the tablet. I think that Whitman was very realistic yesterday versus when she first came in. But being realistic doesn't necessarily mean you're given a good hand. Research In Motion has eighty million subscribers -- I happen to think Research in Motion could get a takeover. Hewlett's too big to get a takeover bid. I'm not saying RIM is going to get a bid, I'm just saying it could. Nokia was the winner. Then they became the loser because of Apple and Samsung. Nortel was neck in neck with Cisco, one of the largest companies in the world, then Nortel disappeared. Burroughs, Univac, NCR, Control Data and Honeywell were amazing hardware companies. Data General, Digital Equipment, Wang, I mean these were all Hewlett Packard's. Now maybe Hewlett Packard had better bloodlines because of Hewlett and Packard. But I'm just too old to sit here and listen to the fact that Hewlett's got a game plan. Because I saw the game plan with Wang and I heard the game plan with Burroughs. I went to see these companies. I went to see Data General. Felt the game plan, listened to the game plan. The game plan didn't hold up. It met the enemy. And the enemy destroyed it. Lindsey Bell:
Well, it looks like in the last couple of days, Apple stock has been up. Jim Cramer:
Well, Apple's just...I mean, Apple is a very...Mapplegate as Rocco calls it... Lindsey Bell:
Yeah, has that been forgotten? Jim Cramer:
Well, these are always spin cycle issues. It's a gaffe, like Biden talking about the buried middle class. It will last for a couple of days. There are so many other applications for maps that Mapplegate can be diminished simply by them saying, "Listen, we screwed up on maps." They have a new iPad coming out. And I saw immediately there were articles today, like New York Post, saying it could hurt Apple's gross margins. Well, yeah sure, but Apple has historically hurt its own gross margins. Again, there's not that much mystery these days to what Apple's up to. And Apple is the winner because Apple has a closed system that's viewed as being superior to a Microsoft/Intel system which is what every PC is. I have a Dell at one office and I have a Hewlett Packard at the other. And you blindfold me. I think they're the exact same PC. I wouldn't know. You open them up and the same stuff falls out. It's pretty simple. Lindsey Bell:
Declining business, PCs. Jim Cramer:
Declining commodity business. Hammermill Paper was a great company at one point. And I used to say, "What is the edge of Hammermill Paper?" Do they have the best uncoated free sheet? Funny thing about uncoated free sheet, it's the same. Whatever you put in your printer, it's the same. Like, do you ever go, "Oh, wow, I really like this company's paper more than that company?" Hewlett Packard. Hammermill. Hewlett. Lindsey Bell:
Okay. Kodak. Okay. Thank you.
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