We sit here puzzled every day about how Nokia (NOK) or Hewlett-Packard (HPQ) or Best Buy (BBY) or Research In Motion (RIMM) could go up over and over again on such little news.
To me, though, that's not the right observation. I think what's really going on is that they went down way too low in 2012, and all they are doing is recovering from some pretty hideous losses. In fact, I could argue that they never should have fallen to where they got to.
Let's start with Nokia. Here's a company that has a gigantic share of the cellphone market and even the smartphone market, with a terrific entry into China with its partner China Mobile. The stock fell to about $2 and stayed there, even as the company won the Chinese business, sold its headquarters to fix its balance sheet and laid off a huge number of employees to stem the losses.
These were all the actions taken by a company that was recognizing its problems and taking action, but the market didn't want to hear anything about it, and the stock was endlessly downgraded. It has since almost doubled.Hewlett-Packard isn't my cup of tea. It stumbled badly in the acquisition of Autonomy, and it seems to have no clear path to deal with the commoditization of its hardware or the market-share loss of its consulting business. I don't know how Meg Whitman will turn this ship around on an earnings-per-share basis, but I monitor the bonds of the company, and they were trading up at year-end while the stock was trading lower. That's a tell, a tell that the stock is wrong, and we found out not that long ago that Hewlett has suitors for what it might want to sell and that it doesn't need to sell anything. No wonder the stock has been rallying and has moved up 20% this year. Best Buy is a situation where it's pretty much the only game in town these days. That doesn't mean that perhaps there shouldn't be a game at all, but I think that Best Buy's problems are execution oriented. Best Buy, like so many other chains, has too many stores and too many unprofitable ones. It is closing the unprofitable ones, and the result is better-than-expected numbers that I think can be trusted, even as Amazon (AMZN) has taken a lot of share.
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