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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  • PrairieLeafFan

    LOL Its just a firmware issue in the BIOS

  • PrairieLeafFan

    I would be interested to know what product line you bought because if it was a Pavilion or Presario…while the product failed, you should have purchased a business product (Probook, Elitebook, etc) that come with warranties that are in line with what a company/professional requires (next day, carry in repair or onsite repair).

    Purchase a consumer product and you get a support agreement for a consumer product.

  • PrairieLeafFan

    You do realize that Canon makes most of HP's printers right?

  • PrairieLeafFan

    IBM does not make PC's, they have not for many years in that they sold that division to Lenovo.

  • PrairieLeafFan

    Call and demand to speak to a corporate case manager, stay calm and explain the issues. Once you have done, ask if they would be willing to either extend the warranty by a year or replace the notebook for one of equal or greater value/specifications. 3 repairs in a calendar year is too much and in most cases (as long as you haven't waited too long) they will just replace it with a new notebook.

  • PrairieLeafFan

    Bingo!

    While they have made questionable products with regards to quality, this is in no way an issue with HP as components used are made using industry standard benchmarks. Aesthetics (casings, plastics, metals, etc) may change, but Intel still makes the processor, Seagate still makes the hard drive and Nvidia still makes the graphics card – regardless of if the product is Dell, Acer, Lenovo or HP – it is the leadership (which has been VERY suspect the last few years) that drives the "idea" that is HP and has failed in doing so. Complacency is HP's worst enemy right now.

  • coolit10

    And their software and patches don't keep up. I am a idiot with computers but constantly frustrated. Snotty techs, just buy a new printer. Last time I looked electrons don't get tired. Just IT companies.

  • coolit10

    You are only a customer until something screws up. 30 – 60 minutes for unservice. Not again.

  • coolit10

    The language police again. Language correctness is does not replace thought. Think about it.A%%

  • coolit10

    I feel your pain, HP is bad. But I have had issues with many IT folks. Service always seems secondary. I bought a wireless headphone so I could still have a life.