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.
Think investors would trust Larry Ellison more with their money than they do Meg Whitman? I do. That increased trust would more than pay for the deal. HP chuckling over Dell's fate is like the hen clucking in the barnyard when a rooster goes into the dinner pot. At the time of publication the author had positions in AAPL, MSFT, COST and IBM. Follow @DanaBlankenhorn This article was written by an independent contributor, separate from TheStreet's regular news coverage.