This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Whitman Keeps PCs, But Can She Save HP?

Stocks in this article: HPQ IBM AMZN

PALO ALTO, Calif. ( TheStreet) - New HP (HPQ) CEO Meg Whitman's decision to keep the company's PC division has won plaudits on Wall Street, although analysts warn that there's plenty to do before the tech giant truly gets back on track.

"This is the first major decision that new CEO Meg Whitman has made and, we believe, the correct one," explained Shaw Wu, an analyst at Sterne Agee, in a note. "The reality is that the PC business is an essential part of HP in running its overall business."

HP CEO Meg Whitman

HP's Personal Systems Group (PSG) accounts for around a third of the company's total revenue and, within enterprises, serves as a vital 'foot in the door', for the tech giant to sell additional technology. PCs are such a core part of HP's identity that getting rid of PSG would have been like disemboweling the company.

The possible PC spinoff thus sent HP's shares into a tailspin when it was announced by former CEO Leo Apotheker earlier this year, and contributed greatly to his ouster last month.

Sure, margins may be under pressure in the PC market, but the risk of extracting one of HP's vital organs was way too dangerous.

"Meg Whitman's first strategic move as CEO is encouraging," added Bill Shope, an analyst at Goldman Sachs (GS), in a note. "We have noted for some time that we felt that it would be difficult for HP to spinoff its PC business without having a negative impact on its Enterprise Storage, Servers and Networking (ESSN) segment -- HP has a tightly integrated supply chain across multiple divisions, and we believe a PC spinoff would have had negative impacts on the company's growth and cost structure."

Still, though, Whitman has plenty of work to do getting HP back on track, not the least of which is repairing the damage done by the PC spinoff snafu. After a period of massive uncertainty, the CEO must now win hearts and minds amongst PC partners and customers.

"We believe HP inflicted some unnecessary damage on itself by creating uncertainty with corporate buyers, channel partners and possibly consumers," explained Jayson Noland, an analyst at R.W. Baird. "We believe confidence will be restored over the next couple of quarters but not without some expense, for example, a large brand campaign, buyer concessions."

1 of 2

Select the service that is right for you!

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 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • 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