Forbes has been pounding the table for HP this week, publishing a hagiography of CEO Meg Whitman, a piece by the same author touting the stock, and a third piece highlighting its cash flow, Whitman's favorite metric (since others aren't doing so well).
I, on the other hand, have been very negative on HP, and Whitman. I've called her strategy a "FUD Offensive," using Fear, Uncertainty, Doubt and PR to hide the complete lack of a mobile strategy, the fading of its key printer niche and its unprofitable ties to Microsoft (MSFT).
Still, it's true that HP is dirt cheap. Despite being up over 50% this year, you're paying just 35 cents for each dollar of sales. That's the reverse of the normal tech multiple, closer to what a retailer like Kroger (KR) might cost. The ratio is worse than that of Dell (DELL), which thinks so little of the market's valuation it wants to go private.
There remain three good reasons to be skeptical of Whitman's HP:
PC and printer sales are still shrinking overall.
There's no real mobile strategy in the market.
The cloud hasn't materialized in the way HP's strategy has anticipated.
Memorial Day is a time when we look into our past and seek inspiration from the sacrifices of those who have come before us. It was a good time for HP to launch another PR attack, and pound the table for stock in this great old company. But I can't buy stocks based on nostalgia, on hope or on faith. If I'm going on a buggy ride, I want to see the destination. I don't see any yet for Hewlett-Packard. Please tell me I'm wrong, and what that destination is. I'd like a solution to this mystery as much as anyone else. I want to believe, too. At the time of publication, the author was long GOOG Follow @DanaBlankenhorn This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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