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HP to Spin Off PCs, Eyes Software Purchase


Liberty

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$99 seems like a great deal, even if you just use it for web browsing. It's a product that will never see any updates to the operating system (or existing apps), any bugs with it will never be fixed, there won't ever be any new apps developed for it, etc., but still a good deal at $99 though - even if you only get a year out of it before wanting something better it's worth it at that price.

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http://brontecapital.blogspot.com/2011/08/software-eats-part-of-world.html

 

Recommended reading for all Dell, CSCO and HP investors (any left?)?

 

"[...]Its OK for Microsoft: Microsoft is still renting 70 software licenses to run on 70 virtual machines. It is still renting office and the whole suite of other Microsoft products. But it is diabolical for Hewlett Packard who like Dell are highly dependent on corporate computing businesses for their margin."

 

- Not a recommendation or offer to buy or sell any securities-

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The applification of hardware is possible under one condition:

 

-There is enough computing power to emulate the real device

 

I don't see how Cisco's higher end routers could be emulated.  ASICS are 100 times more energy and speed efficient then processor based applications. Energy is an important factor when it come to routers. Processor speed acceleration has been slowing down since the beginning of the century. Complex QAM needed in routers cannot be emulated since it's pure analog signal that need to be controlled by less then 1 cycle.

 

For lower end router, I agree the applification is possible. Then again, CSCO is capable of the same... isn't it already doing so with their linksys brands which are basically computers? It's probably doing more or less the same with their other lines.

 

Regards

BeerBaron

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Guest Hester

I don't know a thing about Technology or Tech stocks, but this guys view of HPQ and MSFT future doesn't seem too farfetched.

 

It's interesting to see what will happen given that the value community (funds and message board/blog types) seem to be heavy in this area right now. Low multiples all around but the businesses are changing. Microsoft I think is the most owned name amoung value oriented funds. I have no idea what will happen, but it will be fun to watch, and we'll see who's right in the long run.

 

http://stableboyselections.com/2011/08/20/hpq-down-20-the-market-may-finally-be-recognizing-the-gradual-extinction-of-pcs-apple-ipad-3-is-going-to-whack-everybody/

 

http://stableboyselections.com/2011/08/20/if-microsoft-were-a-hold-em-hand/

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HPQ looks pretty cheap, but I have a hard time considering buying the stock without really knowing their future plans, and I'm not sure they even know them. Their director who oversees their PC business was on CNBC last night and clarified that while they are discontinuing WebOS, they will most likely produce tablets and mobile devices in the future. My only guess as far as what that means is that they'll build products using Android and/or Windows, but that business has equally low margins. Also, it's tough not knowing what they are going to do with their PC business. Will they completely sell it, will they part of it and keep a stake in it, will they spin it off through an IPO, will they keep it as a wholly owned subsidiary? They clearly have no idea what they're doing with it at this point. Their PC business is such a huge part of their revenue, so not knowing the future of it makes it extremely difficult to value the business.

 

Have they ruled out selling WebOS (or even licensing it to other companies)? It seems like RIMM, MSFT or even oogle would probably take WebOS off their hands. I assume they at least own patents that have value.

 

HPQ executives just seem to be playing everything by ear and have no real plan.

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I am surprised at the level of incompetence of the management and board. The direction they are heading makes sense but not the way they are going about it.

 

1. If you are going to concentrate on software, I would think they would put together a portfolio of related software products over a 2-3 year period. You would try to pick up any companies opportunitistically on the cheap or at least at a reasonable price. They just seemed hell bent on making a large acquisition just to show off their intent.

 

2. If they want to divest PC business, I absolutely understand. What I do not get is making it public before they have firm plans. Now they have pigeon holed themselves into a position and they would not get the best price possible for this segment.

 

I am getting the feeling that all these unnecessary actions at this time is an attempt to get away from the fact that they had publicly committed to a $7 EPS by 2014. Management must have realized that this is not achievable and these changes would provide a mechanism for management to not meet the target but avoid the responsibility.

 

The stock is cheap with a modestly incompetent management but they seem to be much worse.

 

Vinod

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1. If you are going to concentrate on software, I would think they would put together a portfolio of related software products over a 2-3 year period. You would try to pick up any companies opportunitistically on the cheap or at least at a reasonable price. They just seemed hell bent on making a large acquisition just to show off their intent.

 

 

And they could've spent a few more billion and made a bid for someone like Salesforce.com instead of Autonomy. Not sure Benioff would accept any bid, but it would've been worth a shot.

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