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HP to Spin Off PCs, Eyes Software Purchase


Liberty
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Sows the same struggle companies like Dell are having. PC's are a commodity.

 

HPQ is also shutting down Web OS. What a complete waste of over $1.2 billion.

 

They can't compete with Apple and Google.

 

-and their printers are awful. I want to toss my HPQ printer out the window on a daily basis.

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-and their printers are awful. I want tO toss my HPQ printer out the window on a daily basis.

In case you print in black and white, I would recommend Xerox. My girlfriend moved in with her "all in one" HP. Every now and then i see her using my simple yet stable printer.  ;D
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Granted, some aspects of its business are very difficult and can make anybody look bad.  However, I am just amazed at what this seemingly "superstar" board has presided over for the past decade:  multiple dumb, overpriced acquisitions, poor execution, a scary battery of executives, pre-texting, in-fighting, the list could go on...

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Makes one appreciate one of Buffett's comments in the recent AR about how to value BRK: how well retained earnings are re-invested over time. Makes BRK look even better.

 

Watching HPQ makes one wonder how to value all that cash that many tech companies are holding. MSFT and GOOG recent purchases also gives one pause.  

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Here's a link to the BOD:  http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-govboard

 

Most haven't been on the board very long.  Other than Andreesen and maybe Whitman, it seems to be filled with non-descript c-suite flunkies, private equity and software people.  No wonder HPQ is so screwed up.  Who are the owners that voted in that board?

 

http://moneycentral.msn.com/ownership?symbol=HPQ&Holding=5%25+Ownership

 

Looks like it's all institutional ownership, insiders own less than 1%.  Might be the poster-child for what happens when the owners are entirely detached from the running of the business.  Kind of amazing really, given its history as a partnership / start-up.

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Wow, down 20%. Mr. Market really doesn't feel good about this.

 

Out of curiosity, what do the HPQ shareholders on this board (and there seems to be many of those) think about this, and are you backing up the truck or reconsidering your investment?

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I do not understand the Autonomy acquisition.  It is almost as bad as the Skype acquisition by MSFT, and both makes me question the leadership and long term returns of either company. 

 

1) I do know some people at Autonomy and they liken their search appliance to a piece of junk.  Google's search supposedly does a much better job and they have the mantra of "do no evil".  Autonomy has no moral qualms about throwing you under the bus and will actively collect personal data and sell it.

 

2) Why is HPQ buying a company that has a $3.4 billion market cap for $10 billion??? 

 

3) How does this acquisition make any sense for HPQ?  They look like they are trying to make a run at IBM by leveraging into the software business, but IBM's acquistions at least made sense to their overall software portfolio: webservices, business process management, software development, J2EE and Java.  I just don't understand how Autonomy makes any sense for HP's overall strategy.

 

It seems that HPQ is trying to become the next Yahoo.  Everything it touches just turns to crap.  And it is sad that after 10 years of bad management, they will probably head the way of Sun.  I will not pay any money for a company with a decent franchise but horrible management.  The market is making a good call on this one.  I think HPQ should head to the teens.

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Wow, down 20%. Mr. Market really doesn't feel good about this.

 

Out of curiosity, what do the HPQ shareholders on this board (and there seems to be many of those) think about this, and are you backing up the truck or reconsidering your investment?

 

I left the boat yesterday and reallocated in other stocks.

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Yes, management is weak spot here but HP is overpaying by spending $10B for Autonomy Corp. and lost more than that $10B in market cap today. So current buyers will have Autonomy corp free thrown with existing businesses. Around 5 times FCF , I think reaction is over done here. Jut my opinion.

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I'd rather own DELL or RIMM at the same valuation.  HPQ management is awful and this acquisition is even worse.  This is exactly why you can't value $1 of tech FCF at $1.  They spend the money on the stupidest shit.  60+% market premium so they can diversify into a better business?  WTF?

 

 

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From Credit Suisse analyst report, dated today:

 

The multiple HP trades on today does not give much credit. Even on our lower estimates

HP trades on a P/E of 6x, this is at an 42% discount to the market, and 29% below Dell

and 44% below IBM. A glance at  Exhibit 3 shows that the company is trading at the

highest discount to IBM than in the past five years and the lowest multiple ever on

earnings. Post these strategic moves, HP will offer comparable margins to IBM assuming

limited synergies. This could allow shares command a higher multiple and allow scope for

rerating.

Exhibit 2: HP trades on 6x forward P/E…a 20 year low Exhibit 3: …and a 50% discount to IBM

 

SOTP valuation suggests break-up value above $40. With the proposed separation/spinoff of the PSG business, investors will increasingly need to value the company on a SOTP

basis or in terms of break-up value. As we show in  Exhibit 4, at a share price of ~$25,  the

market may be valuing the entire consumer business (PC and Printing) at near zer

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Just a heads up.  Anyone who has been interested in a tablet device should go to HP now!  They dropped the 16gb Touchpad to $99 and the 32gb to $149.  The 16gb are out of stock, but you can still get the 32gb.  If you add a $6 filler item such as the multipurpose 8x11 paper, you can use the save30hp code and save $30 more on the 32gb model.  

 

If there is one good thing about this HP fiasco, this is IT. 

 

BTW, these were retailing for $400 and $499 just earlier today.

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I couldn't land the $99 version, but I did pay up at Office Deopt. $129.99, $141 after taxes, for a product that may cost $318 to produce.

 

Man, go back and have them price match Walmart.  Local walmarts are selling the 16gb version for $99.  I just picked up a whole bunch.

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