Hewlett-Packard (HPQ) is knee-deep in the process of converting itself from a computer manufacturer to a diversified IT firm, a prescient move given the headwinds in the OEM business right now. Excessive competition has turned PCs into a highly commoditized business with thin margins and highly cyclical exposure. Now HP is building out its complementary operations, with a focus on high-end enterprise IT services.
As a result, the company should be able to take advantage of the upswing in IT infrastructure spending that companies are undertaking in 2011 -- but competition is still powerful in this new direction. Of all the major PC makers, HP has long been one of the best-diversified, with a large share of the printer market. The printer business provides significant recurring revenue from high-margin consumables such as ink, and it's likely one of the reasons that HP's been one of the firms most eager to embrace enterprise IT.Even though the company's second-quarter earnings last month were a complete debacle (a leaked internal memo forced the firm to release its results earlier than planned), with weak guidance taking most of Wall Street's attention, the company remains on track to continue improving its longer-term fundamentals. Management announced a 50% dividend increase recently, bringing its payouts to 12 cents per share. Hewlett-Packard, one of the top holdings of both John Paulson and David Tepper, shows up on a recent list of Hedge Funds' Biggest Buys and Sells.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
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.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV