NEW YORK ( TheStreet) -- Jim Cramer fills his blog on RealMoney every day with his up-to-the-minute reactions to what's happening in the market and his legendary ahead-of-the-crowd ideas. This week he blogged on:
- ChannelAdvisor and Hewlett-Packard; and
- the latest game plan.
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Two Tech Stocks Explain This MarketPosted at 3:31 p.m. EDT on Thursday, May 23 ChannelAdvisor (ECOM - Get Report) and Hewlett-Packard (HPQ - Get Report), the two standout names today, represent polar opposites, and yet both are up big today, a phenomenon that explains a lot of this market's innate strength. Most market participants thought that Hewlett-Packard would be a disaster, given the rapid secular decline of the personal computer and the hideous results of competitor Dell (DELL). Instead we got the opposite, a totally solid positive-cash-flow quarter that showed a dramatic improvement in the balance sheet and a nice bump in the dividend. None of this was expected. Consequently, Hewlett has rallied significantly, something that makes a ton of sense, because the issue of the company's viability, which was in question not that long ago, has been taken off the table entirely. CEO Meg Whitman has reined in expenses, improved supply-chain management and billing and is doing much more with far less.
All that said, though, the revenue for just about every single line item was horrendous, particularly personal computers, which were down 20%. I like the lineup of new personal computers, which includes new form factors with Android operating systems and ARM Holdings (ARMH) chips instead of the usual Microsoft (MSFT) software and Intel (INTC) Inside semiconductors. Still, as David Faber stated this morning, there's no doubt that the personal computer market could be shrinking right before our eyes, with no conceivable turn in sight. In short, Hewlett-Packard, a once-great growth company, is now a cash cow without the kind of sales boom that the market ultimately wants. Hewlett is a quintessential value play, and if we don't get world economic growth, it will be the quintessential value trap. We will look back and say it was down 44% in 2012 because it looked like the company was doomed but bounced back 40% for the year so far because it's not going out of business. Of course, a stock that plummets 44% then rallies 40% is far from back to even, but it's still something worth writing home about.
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