Hewlett-Packard's Cloud Front A Big Reason To Get In Now

Apr.26.12 | About: HP Inc. (HPQ)

Hewlett Packard (NYSE:HPQ) is a renowned name in the lucrative diversified computer systems industry that is pretty much dominated by IBM. Basing on the prevalent fundamentals, it appears as if HP is bound on the hedges of disaster. In the same breathe the negative quarterly revenue growth of -7% extinguishes the hopes of recovery. A section of analysts in the critic disposition have even pointed out that HP may soon slip into the dreaded nonstarter category.

In as much as the outlook bears some shred of logical sense, I choose to differ. I believe that HP is a sleeping giant that merely overslept. There is still some potential at HP and I am sure that a silver lining is certain to come. There is an incredibly huge gap between IBM and HP as IBM extends an eclipsing market cap of $231 billion- a multiple of HP's lesser $48 billion. Actually HP, Accenture (NYSE:ACN) and Dell (NASDAQ:DELL) have been inevitably placed in a heated rat race as their financial capabilities are closely matched yet shed light on IBM's undisputed dominance. Other would-be challengers to IBM's crown, such as Cray (NASDAQ:CRAY) and Teradata (NYSE:TDC) are, for the time being at least, left out in the cold.

As it is, there are many factors that work against HP. All the same, its share value will increase in the long run. Of course, my opinion is based on prevalent trends and news in the market.

In February, HP announced groundbreaking improvements in its cloud computing front. The tech titan purports to avail an unlined cloud computing service package. The cloud computing improvement will manifest itself through a cloud identity service. This means that users will be able to enjoy better services in a timely fashion. I have convictions that this news will act in favor of HP's share.

According to my speculations, the cloud computing service will peak up mid this year. In the event that this foresight sees the light of day, which it will, there will be an increased level of confidence in HP shares. Likewise, shareholders will lean toward holding rather than selling. This move will further magnify demand, which will in turn trigger an increase in share value. On the flip side, investors will be looking for entry points into HP. Such a high demand will generate positive vibe in the market. Positive vibe will set a platform for HP to stage its much needed come back in the stock market.

Notwithstanding, HP's cloud computing service needs to garner wide support in order to fully propel the tech heavyweight to estimable heights. This is especially so after considering the harsh competition from other cloud computing service providers.

HP has also ramped up its plans to enhance data analysis. It is insistent on the need for a better analytical model that counters the bottleneck brought about by private data networks. Dr. Huberman, the director at HP labs social computing incline, was particularly exclamatory on private networks. He went on to add that HP was in the forefront of tackling the menacing problem brought about by private data sources.

He equally highlighted that proprietary data's inability to be used for research greatly strains development in the current information-dependent civilization. This bold move speaks volumes about HP's commitment to improving the overall global computing experience. Similarly, it suggests that HP is concerned with tackling profound problems in the IT space. It is focused on stamping out the barriers that seemingly pass out as incredibly hard to root out.

As an investor, I am lured in by this particular demeanor. This is because HP's ambitions are nested well beyond the horizons of mediocrity. It is keen on making world-changing breakthroughs. In the event that its ambitions materialize, there will be an unprecedented upsurge in demand. Likewise, existing shareholders will be reluctant to sell. Low sales coupled with high demand will greatly magnify share price which will in turn offset an increase in share value.

In a guest post on the Forbes online platform, Kumu Puri who supposedly happens to be a high ranking executive at Accenture highlighted four trends that would shape the face of the current technological space. One trend that greatly caught my attention is the expansion of emerging markets. Currently HP has an implausibly firm stronghold in Africa and Asia. I believe that the tech guru is resting on a potent goldmine. If it increases productivity in emerging markets, it will heighten revenue levels which will similarly trigger an increase in share value.

Among the four prevalent trends highlighted by Kumu, the growing need for hyper mobility also plays an instrumental role in steering HP towards better heights. Consumers are leaning towards technologies and gadgets that are boundless and non dependent on physical location. Likewise, are looking for easy to use applications that can render real time services. A classic example of such a service is cloud computing.

As earlier stated, HP has unveiled its plans to further improve its cloud computing service. This in itself shows that HP is concerned with shadowing prevalent tendencies in the market. It also suggests that HP is an adept player - a lineament that lures in canny investors looking for notable rewards. Likewise, HP's inclination toward an enhanced cloud computing service suggests that the industry big wig is motivated toward casting its nest on a wide section of the market.

In as much as many investors have blackballed HP, I still advocate for the idea that it is a sleeping giant. The way things are mapping out, I am sure that its wake is around the corner.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.