Hewlett-Packard Stock Split Doesn’t Make Sense for Investors

Update: Hewlett-Packard is selling its 51% stake in a China data-networking operation for about $2.3 billion, The Wall Street Journal reported Thursday. This article, written earlier in the week, explains why the move makes sense and looks ahead to the company's second-quarter earnings report after the bell on Thursday.  

NEW YORK (RealMoney) -- The past 10 years have been a roller coaster for Hewlett-Packard (HPQ) shareholders, with the stock as high as $53 and as low as $12.

Company management has tried every trick in the book to get the shares to go higher. Years ago, they doubled down on the PC business hoping to dominate in that area.

Now, however, Hewlett-Packard is spinning out the PC business because it has turned into a giant albatross. The company bought back massive amounts of stock, created all sorts of one-time gains and laid off thousands of employees, to no avail.

Investing in the stock over the past 10 years has been like shooting the rapids: You never know when you are going over the falls.

In February, I was very critical of Hewlett-Packard bulls who were simply buying the stock because of the company split or stock buybacks. Fortunately, I was right.

After my article, the stock tumbled to about $31 from $38. But now the shares are clawing their way back as investors anticipate the big break-up.

Hewlett-Packard reports its fiscal second-quarter results on Thursday. Even though the quarter won't have much impact on the stock, I thought I would take a look at it anyway.

For the April quarter, investors are expecting revenue of $25.6 billion, down 6.16%. About two-thirds of its revenue comes from overseas, so currency is going to be a big factor in whether the company will be able to meet expectations.

Earnings per share are pegged at 85 cents.

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