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?

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), 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). 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

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 17,039.49 +60.36 0.36%
S&P 500 1,992.37 +5.86 0.30%
NASDAQ 4,532.1040 +5.6220 0.12%

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