This Day On The Street
Continue to site
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

HP's Metamorphosis: 5 Winners & Losers

Microsoft analyst comment has been added to this story.

PALO ALTO, Calif. ( TheStreet) -- The shock waves from HP's (HPQ - Get Report) massive corporate restructuring are reverberating around Silicon Valley.

By looking to spin off its PC business, ditching its WebOS hardware and shifting its focus firmly away from consumers, HP's bold moves could have a major impact on a host of tech heavyweights.

HP's PC buddies such as Microsoft (MSFT - Get Report) and Intel (INTC) and rivals like Dell (DELL), IBM (IBM - Get Report), Cisco (CSCO - Get Report) and Research In Motion (RIMM) will all be watching the company's shape-shift with great interest. For most, this could spell new revenue opportunities.


The bit of good for the Windows purveyor: The decision to ditch WebOS hardware removes a pile of non-Microsoft software-running consumer devices from the market.

The bad: HP's spinoff plans reflect a stagnating PC market, which has always been key to rolling out yet another successful Windows OS refresh cycle. A bad scenario for Microsoft would be if HP's PC unit gets picked up a company that would shift its focus away from Windows. HP, after all, is the largest PC player in the world.

Any number of companies could potentially grab HP's PC operation. Asian giants Acer, Toshiba, Samsung and Lenovo, which bought IBM's computer business in 2005, could be acquirers. Then there's Google -- what if Google decided that it wanted to further stake its claim in the gadget market? Far-fetched though it may be, a Google deal would pose a big challenge to Microsoft.

The weakening PC market also ups the pressure on Microsoft's yet-to-be-launched Windows 8, the mobile device platform that faces two heavily-entrenched market leaders: Apple's iOS and Google's (GOOG) Android.

"[Microsoft] has already bet the company on Windows 8," said Al Hilwa, a software analyst at IDC. "With Windows 8, Microsoft is trying to pull its PC OS into the mobile world."

And as Hilwa points out, a weakening PC market isn't necessarily new news to Microsoft. "To be honest, this is much more positive than negative [for Microsoft]," he said, adding that HP's move away from PCs partly validates Microsoft's partnership with Nokia (NOK) in the growing smartphone space. "[HP's decision] doesn't tell Microsoft anything about the PC market that they didn't know."


Dell, of course, is most obvious beneficiary of the HP spinoff. As the No. 2 PC maker, Dell is expected to capitalize on the uncertainty that now surrounds HP's vast computer business and increase its footprint even further.

"We expect HP's Personal Systems Group to lose market share to Dell and others as the decision-making process is expected to take 12-18 months," said Jayson Noland, an analyst at Robert W. Baird, in a note released on Friday.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
CSCO $27.49 0.00%
IBM $145.94 0.00%
HPQ $12.27 0.00%
MSFT $49.87 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs