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March 28, 2007

Underrated HP

Hewlett Packard (HP) made two notable acquisitions over the last two weeks.
1. Tabblo, an internet printing company with connectivity features for uploading and downloading photos, books and “custom style items”
2. Polyserve, a software company that consolidates and virtualizes network attached storage (NAS).

For the last ten plus months, HP has been hit with a flurry of self-inflicted blows. First, the board room scandal, then the corporate spying on Dell, followed by cumbersome, uphill process, of repairing the company’s image in the media. Despite the external problems, HP’s stock has risen from $29.00 back in June to $43.72 in early January of this year. This was fueled by a series of acquisitions, mergers and alliances. Since January HP’s price has slid back to $39.81. The most recent drop coming on news of profits growing 26% in the first quarter. There are two explanation of this causation: 1) HP missed expectations on earnings or 2) the stock price deflating from profit taking. This is why HP is currently underrated.

Adding Tabblo, a company acclaimed as, “potential to be the print image for the entire web” gives HP a comparative advantage over other print online services. HP’s print related services already account for 7% of the company’s $7 billion in revenue. This comes at a time when cell phones have more and more connectivity via data packages and grass route wifi’s. This is a long-term growth driver for HP, via superior market position.

More financial info on HP (HPQ)

Posted by jwbir at March 28, 2007 12:54 PM


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