Wednesday, February 23, 2011

Is Hewlett Packard (HPQ) an Opportunity?

For followers of Hewlett Packard (HPQ), today's stock price action might seem like deja vu. I first wrote about HPQ back in August after the abrupt departure of CEO Mark Hurd caught investors off-guard. The stock plunged from the high 40's to $38 per share, at which time I thought investors were completely overreacting. Fast forward about six months and Hewlett Packard is still struggling with public perception on Wall Street. The new CEO, a transplant from software maker SAP, has thus far not calmed investors' fears. Although the stock rebounded from $38 in August to $48 yesterday, the company's first quarterly earnings release under new leadership failed to impress.

After merely guiding fiscal 2011 earnings per share exactly to the consensus estimate of $5.24 per share (HPQ has a history of raising its conservative financial guidance) and failing to reach targets on the revenue line, the stock is tumbling 11% today, to about $42.75 per share. In my mind the Street is again overreacting to the lack of confidence in the new CEO. After all, he has been on the job only a few months and has not even unveiled his strategy for the company going forward (that announcement will come on March 14).




Rest of Article

No comments: