This Day On The Street
Continue to site right-arrow
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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Don't Dive Into Hewlett-Packard Just Yet

Stocks in this article: HPQNOKDELLCSCOIBMAAPLGOOGLNVGY

Unlike Dell, there was very little to be excited about with HP's performance, even though networking revenue was up 1%. I don't believe market leader Cisco (CSCO) will be running for cover. Elsewhere, in areas such as servers, which fell 12%, it still seems as if HP is unable to capitalize on the weaknesses shown in this area by both Dell and IBM (IBM).

In that regard, if HP is unable to gain traction when its main rivals are struggling, when is it ever going to happen? I've made the comparison above and it's worth repeating here -- cost-cutting can only take you so far. Although it did help boost HP's bottom line and advanced gross margins by 50 basis points, operating income still fell 13%.


I do question whether it's a good strategy for HP to turn away any business with the fear of sacrificing margins. Cisco went in entirely the opposite direction and offered its large customers what some analysts called "aggressive discounts" that helped Cisco close plenty of business this quarter.

Given the lower-than-expected segment numbers, I don't know if HP is in a position to turn away any business. This strategy works for IBM. But that's IBM. HP has not yet reached that status.

There are still pressing issues such as HP's mobile strategy and how it plans to become relevant in the realm of smartphones and mobile devices. Plus, I don't believe management effectively outlined the company's new growth markets and how they will propel the stock higher in the new tech age dominated by Apple (AAPL) and Google (GOOG).

The stock's resurgence suggests a postponement in HP's sentence to the glue factory. But I would caution investors about counting their chickens before they hatch. You have to consider HP stock has only recovered losses incurred over the past year. On balance, HP is still the same company with the same problems. It's only leaner.

At the time of publication the author was long AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

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