Dell Inc (DELL), Hewlett-Packard Company (HPQ) and the Tough Times for PCs

Published on January 21, 2013 at 2:42 pm by The Motley Fool in News

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No, all of this for Dell applies to Hewlett-Packard as well. I don’t think anyone is doubting that HP has faced some tough times. In the last year the firm’s stock has dropped from a high of $12.68 to $17.21 at yesterday’s close. Heck, that’s after a bit of a rally. In November is was below $12! Not a happy time. HP is trying to move things forward by selling of some subsidiaries but that only goes so far. Eventually, the firm could run out of things to sell and find itself back in the classic ‘two guys in a garage’ mode, trying to innovate. That might be good, but it’ll be terrible for the firm’s shareholders. The simple fact is that making PCs looks to be the next buggy whip industry, dying but not entirely dead.

So what should you do? If you’re into Dell already and the talks move forward, congratulations. You’ve made some money through holding a seriously troubled stock. Right now the numbers I’ve heard place the buyout price at $14 or $15 per share. A bit of a markup, but not huge. Still, I’d consider anything a win. If you’re not into Dell and you KNOW that the buyout is coming and can get in for $12-13, go ahead, but not too deeply.

If you’re into Hewlett-Packard, I’d be more cautious. There’s going to be something happening over there, and no one quite knows what it’ll be. It might be worth that risk-oriented portion of your portfolio but nothing more. Keep an eye on it and see if they can innovate. Because that’s what it’ll require for either Dell or Hewlett-Packard to survive, much less thrive, in the new tablet-oriented computing world.

Heck, maybe the two should combine on a tablet. Everyone else is. I’d like to see that.

Follow Nate on Twitter: @natewooley

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The article Dell, Hewlett-Packard and the Tough Times for PCs originally appeared on Fool.com.