This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

3Com Is Key to H-P's Future

Stocks in this article: HPQCSCOBRCDJNPR

PALO ALTO, Calif. ( TheStreet) -- Hewlett-Packard's (HPQ) acquisition of PALM (PALM) may be more exciting to talk about, but it is the computer maker's purchase of 3Com that could spell the biggest upside for investors.

H-P blew past Wall Street's estimates in its second-quarter results last night; the company was boosted by a rapidly-improving economy. H-P also raised its guidance, citing strong PC sales, a rebound in enterprise spending, and -- crucially -- the impact of adding 3Com to its lineup.

HP

H-P's smartphone and tablet plans have come under the microscope following the $1.2 billion Palm deal, overshadowing last year's $2.7 billion 3Com acquisition. The 3Com deal, however, will help H-P challenge networking giant Cicso (CSCO) and widen a major revenue stream.

During a conference call last night, H-P CEO Mark Hurd explained that 3Com helped the company close deals with two Fortune 500 firms during the second quarter. "We've had a very good start with 3Com -- we have been aggressive in hiring," he said, adding that H-P's ProCurve products also enjoyed a "very significant" number of wins during the quarter.

The tech bellwether's results have prompted Goldman Sachs to raise its 2010 H-P earnings estimate from $4.48 to $4.65. For 2011, the analyst firm also raised its forecast from $4.96 to $5.20, thanks largely to 3Com.

"Higher revenue (despite a bigger FX drag) and the inclusion of 3Com are the main drivers to our increased EPS forecast," wrote Goldman David Bailey in a note released on Wednesday.

H-P only closed its 3Com acquisition on April 12, so the networking firm contributed just $50 million to its second-quarter revenue. The company's overall networking business is nonetheless enjoying rapid growth, with sales up 58% year-over-year.

Cisco, however, still holds about 70% of the networking market, according to Goldman Sachs, but H-P's 3Com deal is pushing in the right direction.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,113.86 +139.55 0.82%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,536.6280 -12.5980 -0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs