Tag Archives: HP

The Dow Weekly: 5 Cheapest Price-to-Book Stocks

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ByMichael Fu:

This is the second edition of the weekly series called The Weekly Dow (for last week’s article on the Top 5 Dividend Plays, click here). This week, we will look at the 5 cheapest Price-to-Book multiple stocks in the Dow Index Industrials Index (DIA). By the way, please reference my prior article on the pros and cons of looking at book value, specifically as it applies to bank and insurance stocks.

The 5 Cheapest P/B Stocks

As of April 9, 2013, the 5 cheapest P/B stocks in the Dow are Alcoa (AA) at 0.7x, Bank of America (BAC) at 0.9x, JP Morgan (JPM) at 1.2x, Travelers (TRV) at 1.3x and Verizon (VZ) at 1.7x.

Note that 3 of these stocks (BAC, JPM and TRV) are bank and insurance stocks. Note that bank stocks and insurance stocks are levered, and the financial assets that are held on their balance


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HP chairman steps down in the wake of corporate difficulties

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Hewlett-Packard Chairman Ray Lane stepped down on Thursday as the head of the historic PC maker’s board of directors following a mismanaged acquisition of software company Autonomy.

As we reported in November, HP announced that an internal investigation had found “accounting improprieties, misrepresentations and disclosure failures” in the financial records of Autonomy, the unstructured “big data” analysis software firm acquired by HP in 2011. HP said it had learned of the issue after being tipped off by “a senior member of Autonomy’s leadership team.” The disclosure came as HP took a non-cash accounting charge of $8.8 billion—over $5 billion of it related directly to Autonomy’s alleged book-cooking.

Two other board members are also now leaving, and Ralph Whitworth, a well-known investor who joined HP’s board in 2011, is taking over as the new interim board chairman. As we’ve reported in recent months, HP has been in deep financial trouble and has notable problems ahead.

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What LG’s acquisition of webOS means for its open source projects

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LG announced yesterday that it would be acquiring webOS from HP to use in LG smart televisions. The company has inherited all of the rights to the source code for webOS, including documentation and engineers, as well as all of its related websites. But what about projects like Open webOS and webOS Ports?

As we now know, the cloud services division of webOS will remain at HP, along with some of the related patents, while LG gets the rest. Martin Risau, senior vice president of webOS for HP, told Ars that from here on out, “LG is totally free to do whatever they want to do” to integrate webOS however it sees fit.

“Open source will be alive and well at LG,” added Sam Chang, vice president of Smart TV at LG. ”We think that’s a really important part of this transaction. When you think about the loyal development community out there and the need for a robust ecosystem to support smart TV, it’s really a perfect fit.” Of course, LG will have to make changes to webOS to optimize it for use with a remote.

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The $169 Android HP Slate 7 Is Just HP’s Latest Beige Box, Only Flat

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HP is late to the tablet game, but definitely not out. At $169, the HP Slate 7 is a sure thing. It’s a guaranteed win for HP even if it doesn’t outsell the competition.

HP just announced the Slate 7. There is nothing particularly special about it. It costs $169, has a dual-core 1.6GHz SoC, and a 16×9 display with a rather thick plastic bezel. In short, it’s a cheap tablet. Remove the HP logo on the backside and it’s just a random, generic tablet. And that’s fine.

At this point, HP as an established and trusted brand, doesn’t have to innovate; they just have to show up.

Despite its recent troubles, HP is still the largest personal computer maker on the planet. The company has held this title since 2006 after trailing Dell for four years. Lenovo might soon steal the title from HP, but that doesn’t diminish HP’s still-valuable brand. For most consumers, HP has, and will continue to be, a safe buy.

It’s not really hyperbole to say everyone has had problems with an HP computer. As the top-selling computer maker collectively over the last 15 years, it has had a long time to disenchant consumers. Everyone has an HP horror story. But despite this, the brand still sells more PCs than any other. A lot of people are still buying HP computers.

Who is Asus to the average Walmart shopper?

As a known brand, consumers are aware what they’re going to get with an HP product. They know they’re going to get adware, sub-par hardware, but a fair price. What will they get with an Asus tablet? Who is Asus to the average Walmart shopper? An unknown.

We all know the story. After years of little executive leadership, HP is floundering in the consumer market. PC sales are down. HP doesn’t have a mobile product. People are buying fewer printers. And, like Aol with dial-up subscriptions, a laughable chunk of HP’s revenue comes from printer ink.

Worse yet, HP’s enterprise hardware and services business is down, too. Still, even with these declines, HP managed to beat Wall Street’s expectations last quarter.

In short, the HP machine is slowing down, but even a slowed HP is a serious contender.

HP is ubiquitous. HP computers are sold everywhere from Walmart to Best Buy to every office supply store known to man. HP became the largest computer maker not because they made the best computers, but because of logistics.

Thanks to this vast distribution network, HP can get a $169 Android tablet in front of a lot of eyes with little effort. Then, once this tablet makes inroads, HP will likely follow its proven laptop strategy and release an upgraded model with a better screen, better specs and a slightly higher price tag. This model, or perhaps family of models, would provide an easy up-sell from the Slate 7. Want a better screen? Spend an extra $30 and get a faster processor, too.

The HP Slate 7 is HP playing to its strengths. This is HP moving units, not creating the next big thing.

Tablets are quickly becoming a commodity and selling beige boxes is what HP does best. At this point a budget tablet is a budget tablet. Our own Chris Velazco played with HP’s model for a few minutes and found it underwhelming. Well, yeah. It’s a $169 tablet. It’s not going to impress, but it doesn’t have to.

HP sat on the sidelines and watched Amazon and Google’s expensive race to the bottom, which created this market of cheap tablets. HP has never been a premium product; it knows how to sell boatloads of boring machines loaded with sponsored software to keep the cost down. HP’s first attempt at a consumer tablet failed simply because it attempted to be something special. It wasn’t a beige box. The HP Slate 7 shouldn’t fail.

Stop Trying To Make WebOS Happen. It’s Not Going To Happen

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We need to face facts: WebOS is dead. Barring the unwavering support of the enthusiast community, the former mobile OS will never become a commercial product and, LG investment or no, the possibility of WebOS surviving a sale is nil.

WebOS is no more, has ceased to be, is bereft of life, and it rests in peace. It is an ex-OS.

HP is going through the same doldrums all PC makers are facing. Had they put a modicum of energy into updating the TouchPad and the WebOS mobile line, they probably could have made it out of the horse latitudes of the downturn, but as it stands they jettisoned an amazing amount of valuable cargo, including support for the WebOS team. What LG is supposedly buying is a ready-made stack for their smart TV offerings and not a real OS. What HP is selling is dead weight.

TV operating systems are about as low as you can go in the graphical environment game. TVs face a snails-pace upgrade cycle, are orphaned by their makers, and are nearly invisible to the consumer. Slapping WebOS into a TV is tantamount to sticking it onto a medical device – you’re assured a slow and steady obsolescence.

The last big news out of WebOS came over a year ago, with the release of 3.0.5. The Community Edition wiki was last updated in August. If there is such a thing as a zombie OS, this is it.

It’s over. Even if the rumors are true that LG would even consider picking this thing up over, say, using a ready-made Android stack, is a testament to the fire-sale price HP would consider and, more important, LG’s efforts to grab some of that enthusiast cool. After all, LG is fighting Samsung for mind and market share and a little WebOS magic could (but won’t) pull them partially out of a deep hole. But don’t bet on it.

HP’s first Android tablet is $169 and will be at Mobile World Congress

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HP’s Slate 7 is its first Android device from HP.
HP

HP announced it’s recommitting itself to the tablet game following the troubled HP Touchpad saga—its new Slate 7 tablet is a 7” tablet running Android 4.1 that will go on sale for $169 in April of this year. HP hopes printing will be one of the tablet’s key differentiating factors, and the tablet should be able to print from most apps both by using native drivers and through HP’s ePrint technology.

The tablet’s stainless steel construction looks solid, though for this price you shouldn’t expect top-of-the-line specs: its display is only 1024×600, and it supports only 2.4GHz 802.11n and Bluetooth 2.1. Included in the tablet are 1GB of RAM, 8GB of internal storage, a front-facing VGA webcam, and a rear-facing 3.0 megapixel camera. It’s all packed into a 13.05 ounce, 10.7mm thick package that HP estimates will last for five hours of video playback. HP wouldn’t say exactly what SoC is powering the Slate 7, but a 1.6GHz dual-core Cortex-A9-based chip only leaves us with a few real possibilities—it’s likely to be some variant of the Texas Instruments OMAP 4 that also powers the Kindle Fire lineup.

The tablet looks reasonably attractive for the price, but it should be noted the Nexus 7 still beats it in a few important metrics (albeit at a cost of $30 more). The Nexus 7 features a quad-core Tegra 3 SoC (though at a slightly lower clock speed), a higher-resolution display, more internal storage, and stock Android 4.2. While the Slate 7 offers a microSD card slot and a rear-facing camera, the rest of its specs compare more favorably to the $159 Kindle Fire than to Asus’ and Google’s tablet.

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HP Beats Expectations With Revenue of $28.36B, $1.2B Earnings And EPS Of $0.82 For Q1 2013

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HP just released its Q1 2013 earnings report and for once, the company beat analyst expectations: revenue was once again down 6% to $28.4 billion, but still higher than most analysts expected. The company reported an income of $1.2 billion and EPS of $0.82. Last quarter, HP still reported earnings of $30 billion and a net loss of $6.9 billion after its $8.8 billion write-down due to alleged accounting fraud at Autonomy prior to HP acquiring the company.

The stock market is reacting very positively to this news. HP’s stock is currently trading at $18.35 in after-hours trading, up $7.3%.

The general consensus among analysts was that HP’s total revenue would decline by about 7.5% compared to the year-ago quarter and that revenue would be around $27.79 billion, with a net income of around $1.39 billion and earnings per share would be around $0.71, a decline of 24% compared to last year’s EPS of $0.92. HP clearly beat these expectations.

After last year’s $17 billion write-off after the acquisitions of Electronic Data Systems and Autonomy, as well as five previous quarters of declining revenues, many shareholders were hoping that CEO Meg Whitman would be able to stop the company from sinking even further.

HP’s ailing PC business shows no sign of recovering so far. After a 14% decline in Q4 2012, the company reported n 8% decline in revenue from personal computers for this quarter. With its Servers, Storage and Networking revenue also dropping by 9% in Q4 2012 and 4% this quarter, the only area where HP really made some progress last time around was in software, where revenue grew 14%, but revenue from this business declined by 2% last quarter.

“We beat our non-GAAP diluted EPS outlook for the quarter by $0.11 per share, driven by improved execution, improvement in our channel and go-to-market efforts and the impact of the restructuring program we announced in May 2012,” said Meg Whitman, HP president and chief executive officer. “While there’s still a lot of work to do to generate the kind of growth we want to see, our turnaround is starting to gain traction as a result of the actions we took in 2012 to lay the foundation for HP’s future.”

HP, of course, faces a lot of headwind given that sales of its core products, including PCs, printers and servers, are on a downward trend that the whole industry is feeling and that isn’t likely to recover anytime soon. The company missed its chance to become a player in the mobile phone and tablet market and it remains to be seen if Whitman and her team can turn the company around.

For the second quarter of 2013, HP estimates that non-GAAP diluted EPS will be in the range of $0.80 to $0.82 and GAAP diluted EPS will be in the range of $0.38 to $0.40.

Here are the full segment results from HP:

  • Personal Systems revenue was down 8% year over year with a 2.7% operating margin. Commercial revenue decreased 4%, and Consumer revenue declined 13%. Total units were down 5% with Desktops units up 10% and Notebooks units down 14%.
  • Printing revenue declined 5% year over year with a strong operating margin of 16.1%. Total hardware units were down 11% year over year. Commercial hardware units were down 6% year over year, and Consumer hardware units were down 13% year over year.
  • Enterprise Group revenue declined 4% year over year with a 15.5% operating margin. Networking revenue was up 4%, Industry Standard Servers revenue was down 3%, Business Critical Systems revenue was down 24%, Storage revenue was down 13% and Technology Services revenue was down 1% year over year.
  • Enterprise Services revenue declined 7% year over year with a 1.3% operating margin. Application and Business Services revenue was down 9% year over year, and IT Outsourcing revenue declined 6% year over year.
  • Software revenue was down 2% year over year with a 17.0% operating margin. Support revenue was up 11% while license revenue was down 16% and services revenue was down 8% year over year.
  • HP Financial Services revenue grew 1% year over year as a 1% increase in net portfolio assets was offset by a 25% decrease in financing volume. The business delivered a 10.6% operating margin.

Who needs HP and Dell? Facebook now designs all its own servers

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Facebook’s Open Vault storage server, codenamed “Knox.”
Facebook

Nearly two years ago, Facebook unveiled what it called the Open Compute Project. The idea was to share designs for data center hardware like servers, storage, and racks so that companies could build their own equipment instead of relying on the narrow options provided by hardware vendors.

While anyone could benefit, Facebook led the way in deploying the custom-made hardware in its own data centers. The project has now advanced to the point where all new servers deployed by Facebook have been designed by Facebook itself or designed by others to Facebook’s demanding specifications. Custom gear today takes up more than half of the equipment in Facebook data centers. Next up, Facebook will open a 290,000-square-foot data center in Sweden stocked entirely with servers of its own design, a first for the company.

“It’s the first one where we’re going to have 100 percent Open Compute servers inside,” Frank Frankovsky, VP of hardware design and supply chain operations at Facebook, told Ars in a phone interview this week.

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