May 22, 2012
Stock market analyst Seeking Alpha has predicted a 15 percent stock fall for HP by 2013, noting that the “huge restructuring” planned, along with the huge job cuts announced earlier this week, mean that HP’s place “on top of the mountain” is “just no longer the reality”.
The analyst notes that details of the OEM’s restructuring will be made available with its Q1 reports, stating that HP’s reasoning is it needs to “make needed investments”, though some close to the OEM state that “the restructure is due in large part to declining profitability”, and with a recent decrease in stock price, CEO Meg Whitman is now “determined to turn the company around”.
The company’s move back into tablet computing after the debacle with its WebOS platform is apparently a “higher growth area” that the OEM is aiming to target, and when the announcement was made of its move back into the sector, “shares rose considerably”. However, regardless of this growth, Seeking Alpha notes that HP has “predicted further declines” already, and competitors such as IBM are creating new jobs whilst HP cuts eight percent of its global workforce.
HP’s long running battle with Oracle over the Itanium chip is also turning into a “very serious problem” for the OEM, as Oracle already stopped producing software using the chips, which HP make 15 percent profit on, and the case’s implications, “a closely guarded secret”, could yet deal a “big blow” to HP.
Seeking Alpha also notes that the move into tablet computing has been poorly handled by competitors in the face of Apple’s successful iPad, stating that “PC producers are simply not on top of the game” and that “the time may have come to move away from PC manufacturing stocks” for HP and its competitors.
The analyst concludes by warning investorst to “steer clear of this one for now, and hope it can invest the money it is saving on lay offs into something that will yield profits in later quarters”.
Categories : Products and Technology