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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Whitman Keeps PCs, But Can She Save HP?

Strategically, there are also major long-term question marks hanging over HP. In particular, Whitman needs to crank up the innovation engine. One of Silicon Valley's original trailblazers, HP has been criticized for falling behind the likes of Apple (AAPL) over the last decade.

"The longer-term challenge for HP is to drive growth in its PC business," notes Sterne Agee's Wu. "Obviously, an improvement in the macroeconomic environment would help, but HP needs to drive more innovation and create products that customers desire."

HP's attempts to drive innovation should include the critically-acclaimed WebOS mobile operating system, according to Wu. The raft of controversial changes announced by Apotheker in August included ditching hardware based on WebOS, spelling the end for HP's TouchPad tablet.

The Palo Alto, Calif.-based company should, however, rethink its WebOS strategy, says the analyst, echoing concerns that HP is relinquishing one of the most potent weapons in its arsenal.

"While it may be costly, we believe HP should at least give its WebOS operating system a fairer chance at success before deciding to pull the plug," he explained. "The alternative the company should also seriously consider is to sell WebOS to a leading mobile device maker like Samsung, HTC, or Amazon (AMZN - Get Report), who may make better use of the technology."

HP's chairman Ray Lane has already said that the company can make money out of WebOS by licensing it out to third parties, although precise details on the future of the technology have not yet been revealed.

Boosting HP's business around high-margin areas such as software and services, is another huge challenge, with HP desperate to emulate the success of arch-rival IBM (IBM - Get Report). The $11 billion purchase of U.K. data analytics software specialist Autonomy will play a part in this effort, although the new CEO must also make sense of Apotheker's somewhat muddled strategy around cloud services and connectivity.

Critics of HP's latest move warn that it will be even more difficult for Whitman to boost margins with the PC business in tow. "We don't view this decision to keep PSG positively for HP," notes Brian White, an analyst for Ticonderoga Securities. "We believe the company would do better for shareholders to focus its efforts on enterprise initiatives that play into secular trends in the data center such as cloud computing."

Shares of HP, which have tumbled more than 23% over the last three months, gained 59 cents, or 2.19%, to $27.58 on Friday.

-- Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

>To submit a news tip, send an email to: tips@thestreet.com.

2 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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
SYM TRADE IT LAST %CHG
AMZN $380.16 0.00%
IBM $161.94 0.00%
HPQ $34.84 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

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