Will H-P Divest Core Businesses?

  Google+  Twitter | + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

After shares plunged 45 percent over the past year, Hewlett-Packard (NYSE:HPQ) may cut loose some of its weaker elements, including its PC and printer divisions, which together accounted for 49 percent of the company’s total sales in fiscal 2012.

H-P saw a rough slide down through the stock market in 2012, but 2013 is the chance for some changes to bring the company back into the game. However, the game H-P plays from now on may be quite different than the one it’s played so far. Though previously Meg Whitman, CEO at H-P, said she didn’t plan to sell off the company’s PC section, it seems more and more possible as the company looks at ways to shed “assets and businesses that may no longer help [them] meet [their] objectives.”

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

CHEAT SHEET Analysis: Could divestitures boost H-P’s shares?

One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company‚Äôs stock. If H-P decides to remove its PC or printing division, the company would surely see a shift in revenue, but it’s uncertain whether it would be up or down. The drop in revenue would be massive if either division was lost, but either division could also be costing H-P profits.

Large divestitures by H-P may frighten some shareholders, but others that are looking toward the future of the company may see how current divisions won’t lend to the company’s long-term objectives. Cutting the fat now may make for a stronger company, and stock, in the long term.

Investing Insights: Is Intel a Buy With This New Chip on the Market?

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business