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!

Somebody Needs to Buy HP, Now


NEW YORK ( TheStreet) -- Michael Dell has good reason to take Dell (DELL) private.

The public investor doesn't value it. Dell may be down but it's not broke. It still makes money. It has operations around the world and is re-focusing on cloud computing and computer services. It has growth prospects.

By taking his company private Dell can focus on those growth prospects without worrying about quarterly earnings, and without having to talk to people like me ever again. Many of our greatest companies are privately held, Forbes notes, from Cargill to Mars to Bechtel. With annual sales of $60 billion, Dell would be number three on the 2012 Forbes list.

Rival Hewlett-Packard's (HPQ) reaction to this was a big nyaah-nyaah-nyaah, telling ComputerWorld confidently it's going to steal a bunch of Dell's customers due to all this "uncertainty."

But if any company on the planet should be concerned about a private equity takeout, it's HP.

While the equity value of Apple (AAPL) and Microsoft (MSFT) is more than twice their annual sales, and that of Google (GOOG) nearly five times more, HP's equity is worth barely more than one-quarter its annual sales. That's worse than retailers Target (TGT) and Costco (COST). It's worse than Dell.

Quartz reports that some on HP's board are now considering breaking the company apart, and HP management told Business Insider last month it might unload some weaker divisions.

The trouble is, HP is nothing but weak divisions.

Jon Xavier of Silicon Valley Business Journal recently ticked off the company's weak sisters and found himself listing the whole company.

There is value in HP, even if it's breakup value. Like an NBA team with expiring contracts, it can dump salary in the form of losses others could write off.

The company's official turnaround strategy, from an October press release, is to focus on cloud technology, data security and something called "information optimization." Mostly it's about using software to sell hardware, which is what Oracle (ORCL) is doing. Only Oracle's database software is essential to its customers in ways HP's software simply isn't.

Speaking of Oracle, it is just one of several rivals that now have the power to buy HP, sell off the stuff that doesn't work and pocket the rest. Oracle's market cap is $167 billion, Microsoft's is almost $230 billion, IBM's (IBM) is almost $227 billion. Contrast that with HP's $33.5 billion.

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 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

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