Investment Contrarians

Why You Should Stay Away from HP

By for Investment Contrarians |

Stay Away from HPHewlett-Packard Company (NYSE/HPQ) sank on Thursday after warning the market to expect less in 2013, as the former technology kingpin struggles to revamp its business.

The company has seen over half of its market-cap dissipate over the past year, rewarding the short-selling traders, according to my stock analysis.

CEO Margaret Whitman has a titanic job ahead of her, as she tries to turn the sinking ship around; but with crippling declines in the demand for PCs and intense competition in printers and other products, my stock analysis tells me that the path will be difficult and there is no guarantee of success.

My technical analysis of the chart of Hewlett-Packard (HP) tells the story of the company’s demise from a Wall Street darling to a misfit. Based on my stock analysis, the rapid switch between CEOs (there have been three since 2010 alone) has hurt the company’s business. HP had been in the retail tablet market, but it exited in August 2011 under the leadership of former-CEO Leo Apotheker, who took over in 2010 from Mark Hurd. Following the company’s departure from the tablet business, Apotheker was replaced by Whitman in September 2011, who now faces the daunting task of figuring out what to do to save the company.

Hewlett-Packard Chart

Chart courtesy of www.StockCharts.com

According to Whitman, it will take years to turn HP around, as the company looks to streamline its product line and become a leaner, more efficient technology company. Yet, according to my stock analysis, the company’s lack of exposure in the surging mobile business is problematic. But this could change, as HP now has a dedicated group responsible for growing its mobile business; albeit, it may be too late, according to my stock analysis.

The PC market is dead, and HP will need to re-invent itself under Whitman’s five-year plan that predicts growth will return by 2015, but, based on my stock analysis, it will not be easy. PC growth is estimated at below one percent this year, according to International Data Corporation (IDC). And exacerbating the situation, the company’s management is expecting the worst. The PC market may not grow until 2016, according to HP’s Todd Bradley, head of the company’s PC unit.

HP-rival Dell Inc. (NASDAQ/DELL) is also finding the PC market extremely challenging.

My stock analysis tells me that Apple Inc. (NASDAQ/AAPL) is to blame for the turmoil and hardship that PC makers are experiencing, namely for laptops replacing tablets with its “iPad.”

Under Whitman, HP appears to be focusing on the business side of the tablet market, where the demand is high for tablets more powerful than Apple’s iPad. HP recently announced its new “Windows 8”–based “ElitePad 900” that caters to businesses, but may also be attractive to retail users who demand a more powerful alternative to the iPad and other tablets.

The early prognosis is that the ElitePad 900 is good, and it is expected to be launched in January 2013. The tablet will be powered by the “Atom” chip from Intel Corporation (NASDAQ/INTC), with two gigabytes of RAM, a 10-inch display, an eight-megapixel camera/video recorder. Overall, HP’s new tablet is intriguing. We will just have to wait to see how the market responds and whether Apple will come back with a more powerful iPad.

Good luck, Meg!

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  • Terri

    Oh dear.

    "Correct use of language is no substitute for original thought"

    It's probably closer to what you mean.

    Evidently the ability to clearly communicate through a common language is advantageous. Without communication your thoughts stay in your head. Think about it.

  • jebova2301

    Well, I can say that while the stocks may be tanking, my HP laptop is running phenomenally. The only issues I have run into with it are a fan that went bad(I think part of it was my fault), a couple screws in the bottom fell out, causing the bottom to break(again, could be my fault for not tightening them good enough when I replaced the fan), and the keyboard backlight doesn't work(entirely my fault). I replaced the fan and haven't had any problems with it since. I could have replaced the bottom, but I found the screw in my room and just screwed it back in and it has held fine. The keyboard light was all my fault, because I broke the connector on the motherboard when I wasn't paying attention.

    Only thing I wish now is that I had a bigger or new battery. Battery used to last about 4 hours. Now, since it is well over 2 years old and has seen AT LEAST 500 full charge and discharge cycles, it only runs for about 2 hours, maybe 2.5 at best. Personally, I would buy another HP. It has lasted a lot longer than any Acer I had. In a year, it will have lasted as long as my built to order gaming laptop in 2007 lasted.

  • Terri’s Dildo

    I once deeply desired to stick a word up my ass so far that I could feel it in my throat. I though about it while I thought about you Terri, and I realized what you must feel like everyday with your sphincter and gullet stretched so…