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Wednesday, February 18, 2009

Hewlett Packard (HPQ) preview

HP has been showing solid market share data all quarter.  Units have remained strong though pricing remains under pressure.  Generally, HP makes most of their personal computing money in printer ink, the lifeblood of the company.  Ink channel inventories were somewhat below typical levels last quarter.  My guess is they didn’t tick up much as most distributors are so focused on decreasing inventories.

In this market, if the company hits numbers, guides next quarter down less than 10% vs consensus and doesn’t have a significant drop off in operating metrics as a result, the stock is going to be perceived as cheap.  While I’d love to be negative on them because they sell PCs to consumers, I just don’t see the degradation in their business that calls for a bearish stance.  Dell, I see it.  HP isn’t an expensive stock and they’re very well managed.  I think it’s a safe port in a storm.

And yeah, I’m long some.

1 comment:

Roy Howard said...

Still cheap but not a good showing at all. Had to make a sale.

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