This Day On The Street
Continue to site
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

The 10 Dumbest Things on Wall Street This Summer

2. HP Charges Ahead (Originally published August 10, 2012)

Hewlett-Packard (HPQ) is once again leading the charge in Silicon Valley.

Charge-offs, that is.

The once-proud printer company announced Wednesday its plan to take a colossal $8 billion charge against its earnings when it reports third-quarter results Aug. 22, leading to a record loss of nearly $9 billion. The charge is due to a writedown of the value of its service business, definitively proving that the company overpaid when it picked up Electronic Data Systems in 2008 for $14 billion. HP has only posted one quarterly loss in the past 15 years for those keeping score.

And for those more comfortable speaking in acronyms: EDS is no IBM (IBM) so Q3 at HP is DOA.

Sorry about that. Sometimes all this dumbness just gets us giddy.

Anyway, Hewlett-Packard picked up EDS in order to transform itself from a printer maker into an information-technology company, just like IBM did so successfully. Too bad it couldn't make the change, as the division has seen flat revenue and declining profits for the past two years.

Nor could it make the change to a PC or mobile-device company. Last quarter HP announced it was writing off $1.2 billion from the value of the Compaq brand name. HP purchased Compaq in 2002 for $25 billion. And, as for that $1.2 billion Palm purchase in 2010, well, we haven't gone through all the footnotes yet, but it's safe to say HP's accountants probably palmed that one off somewhere along the line. And if they haven't, then stay tuned.

Yep, it sure is sad when goodwill goes bad. And it's even sadder when an American corporate icon like HP undergoes a massively expensive -- and very public -- identity crisis. Shares of the company have lost a quarter of their value this year and almost 15% since Meg Whitman took the CEO reins from Leo Apotheker last September.

Which brings us to the British company Autonomy, which Apotheker acquired for $10.6 billion in cash with the goal of turning HP into a software giant. In May, Whitman told analysts on HP's quarterly earnings call that she was still optimistic about Autonomy's future despite its "significant decline" in annual revenue.

Hopefully we will hear better things about Autonomy from Whitman when HP reports later this month. But even if they can't turn things around, it's no biggie. If they can't make a change, they can always take a charge.

Until, of course, they can't.

9 of 10

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
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
SYM TRADE IT LAST %CHG
CHK $14.11 0.00%
C $54.08 0.00%
GRPN $6.38 0.00%
JCP $8.59 0.00%
JPM $65.78 0.00%

Markets

DOW 18,010.68 -115.44 -0.64%
S&P 500 2,107.39 -13.40 -0.63%
NASDAQ 5,070.0260 -27.95 -0.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs