Best Buy Co., Inc. (NYSE:BBY) may be able to sell additional computing devices, with the decline in inventory likely to keep investors optimistic of Best Buy Co., Inc. (NYSE:BBY)’s immediate future. Best Buy has been able to stage a 23% rally in the price of its stock since the beginning of the year. In its fourth quarter earnings announcement Best Buy Co., Inc. (NYSE:BBY) stated that computing and mobile phones saw a 7% year-over-year growth in revenues, implying that the Windows computer may have more demand than what analysts were anticipating. Not to mention the fact that Best Buy Co., Inc. (NYSE:BBY) reported a loss of $1.31 earnings per share in the previous year. Analysts on a consensus basis anticipate Best Buy Co., Inc. (NYSE:BBY) to turn around losses, with a profit of $2.19 per share in the current fiscal year. The company’s return to profitability will be driven by cost-cutting. This can be easily accomplished by cutting down on the number of stores.
While the marginal benefit experienced from a Windows 8 may be limited, at the very least we guys have a legitimate excuse to upgrade our computer without our wives screaming at us for once.
Buy Hewlett-Packard
Hewlett-Packard Company (NYSE:HPQ) has reported some losses due to the impairments it had to record. An impairment is a paper loss on the value of its assets.
Hewlett-Packard Company (NYSE:HPQ) had to report these losses on the income statement, which resulted in the negative earnings per share. On the bright side, Hewlett-Packard generates $10.57 billion in cash from its operations. Also, the losses that have been realized will not be realized in future accounting periods.
Analysts on a consensus basis anticipate Hewlett-Packard Company (NYSE:HPQ) to report a profit of $3.49 per share. Hewlett-Packard’s current EPS is negative $6.41. This implies that investors are paying a 6.2 future earnings multiple, assuming Hewlett-Packard is able to report earnings at $3.49. This is downright cheap in light of the desktop refresh cycle brought on by the Windows 8.
Conclusion
The skeptics have had their field day with Microsoft Corporation’s (NASDAQ:MSFT) and its eco-system. But as the data clearly points out, the 100 million Windows units sold is actually favorable for Microsoft, despite what the critics say.
Perhaps Hewlett-Packard Company (NYSE:HPQ) can turn the corner on its declining revenues by focusing on value-added services while absorbing the benefits of a PC refresh cycle brought on by the Windows 8. The personal computer isn’t dead, and Microsoft Corporation’s (NASDAQ:MSFT) isn’t a beached whale whale just yet.
The article Windows 8 Was A Financial Success originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.
