Oracle Corporation (ORCL), Hewlett-Packard Company (HPQ): Who Gets Hit in the Cloud Hangover III

Still, the company has assets, over $108 billion of them. Its debt-to-assets ratio is no worse than that of Oracle, although it couldn’t pay that debt on demand. And, while CEO Meg Whitman is unproven as a turnaround artist, at least she’s fully in-command of the company, having seen off her main rival, board chairman Ray Lane.

More important, perhaps, Hewlett-Packard Company (NYSE:HPQ) has a cloud strategy. A real cloud strategy. It is modeled on that of IBM, as many past strategies have been, but it’s a strategy that works. Build private clouds, build a public cloud, offer real cloud software, applications built on cloud, and help in helping enterprises move toward cloud.

HP is further along on this strategic turn than many analysts believe. This is especially true on the product front, where it recently announced “Project Moonshot,” a server rack organized for cloud processing, almost a “cloud in a box.”

All of which means that Hewlett-Packard Company (NYSE:HPQ) has more of a future than people think. Its PC and printer businesses remain problematic, it could really use a play in something like 3D printing, where it has a reputation but no products, but it is making the turn toward the future, and eventually that will start showing up in results.

My Foolish take

When you look at cloud stocks, understand the trends. Cloud cannot be resisted. Cloud flattens costs. Cloud enables a combination of very cheap, highly scalable public-facing Web assets tied to ever-cheaper, commodity hardware in new cloud data centers.

In time, cloud moves inexorably toward software. Cloud is defined by software, not hardware, which means that specialized storage and networking units are as doomed today as specialized servers were 5 years ago.

Evaluate all cloud stocks by this metric. Do they understand the cloud, and are they fully valued. I’ll bet you would be surprised at which company, of all those covered here, I find most attractive in the current market.

Hewlett-Packard Company (NYSE:HPQ).

Dana Blankenhorn has no position in any stocks mentioned. The Motley Fool owns shares of Oracle.