I noticed on ZDnet that HP bought EDS to take on IBMs IT services and IBM is countering with the CPU processing power of its Z series machines up against HP-UX. Kind of reminds me of the German Navy in WWI going to war with not much sea around them just like the margins in the EDS services business. I hope HP actually own the factories that make their HP-UX PA-RISC chips
HP has announced 8 billion dollar share buybacks two years running to service employye sacrifice shareholdings. Can anyone tell me why their share price is going up when the company has shrunk its capital by 8 billion dollars two years running?
>Can anyone tell me why their share price is going up
1. Earnings are going up faster than predicted (either by HP or analysts). I believe HP has beaten analysts' ESP estimates every quarter since Hurd took over. 2. Market share is increasing in several areas. 3. Stock buybacks reduce the float which in turn increases earnings per share (i.e. dividing earnings by fewer shares). 4. The street loves Mark Hurd who underpromises and overperforms per Hewlett and Packard's original philosophy.
The most sensible share buyback i have seen is the one IBM did in then late 90's when their share price was way overvalued at $150. It was to protect itself from the dot com crash. In the case of HP they are spending cash reserves to pay their employees who have salary sacrificed to buy HP shares. HP has become a Compaq dominated company in that it makes decisions based on whether it will improve their bottom line. Along the way they have consumed Digital and HP who were the only companies that could actually come up with innovation. Now there is only IBM that has the resources to innovate.
HP produce consumer electronics to compete at a price point with DELL et all and ask anybody who has bought an HP desktop if it is a mishmash of the cheapest components cobbled together to compete. IBM saw this coming and dumped their PC division onto China as Lenovo whereas HP just let the goodwill associated with the Compaq brandname seep into the ground.
The day will come when people realise that their outsourced solutions are designed using as much HP hardware as possible to improve the bottom line of other divisions. Hardware that i might add that has been moved halfway round the world with six stops along the way in different parts of the world who all add a piece along with their markup.
I pity the poor sod who inherits the HP company after Hurd has collected his shares and moved on.