"[HP's] balance sheet is a mess, says Sterne Agee's Shaw Wu, who joined other analysts in...

"[HP's] balance sheet is a mess, says Sterne Agee's Shaw Wu, who joined other analysts in downgrading the IT giant following its analyst day warning. Though H-P (HPQ -1.4%) officially has a book value of $16/share, Wu suggests it's actually -$2/share after backing out goodwill. Wu's sum-of-the-parts analysis of H-P produces a bull-case valuation of $15/share, but he thinks $10/share is more reasonable. Argus also downgraded H-P, and suggested its job cuts need to go beyond 29K.

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Comments (7)
  • losaneglee
    , contributor
    Comments (53) | Send Message
    goodwill is cash already spent, just a big tax deduction now, doesn't mean much. would like to hear details on value of sum of parts.
    5 Oct 2012, 06:22 PM Reply Like
  • Brendan O'Boyle
    , contributor
    Comments (1290) | Send Message
    And they just noticed this now?


    The balance sheet is irrelevant, HPQ is not a buy because the business is in serious trouble and they don't appear to have a plan. I was telling people that months ago...
    5 Oct 2012, 06:26 PM Reply Like
  • jstratt
    , contributor
    Comments (4029) | Send Message
    I will be interested in seeing the cash flow for the most recent quarter when reported. As bad as management is, my guess is a valuation based on estimated cash flows will yield the best approximation of stock valuation.


    A negative valuation in reality is unlikely. My guess is HPQ cash flows will suggest a 40 billion company valuation. Currently shares are valued at 28+ billion in the market.


    However a dollar in the hands of a HPQ leader probably isnt worth more than .70c.
    5 Oct 2012, 07:27 PM Reply Like
  • Davidoff
    , contributor
    Comments (409) | Send Message
    There is not much to do for HP, sell the computer departement while HP brand still represents a lot and invest in software, service, photo and printing. However, even the printing departement becomes more irrelevant each year... Without the hardware division the company will worth less, but the share will be more worthy. The paradox of the stock market.
    6 Oct 2012, 11:55 AM Reply Like
  • TwistTie
    , contributor
    Comments (2429) | Send Message
    I understand that HPQ is having a bad day, but I don't understand most of the analysis.


    It's not that I disagree, I just don't understand.


    I just peeked at Yahoo's "key statistics" and the goodwill/total assets ratio for HPQ and IBM looks like this...


    HPQ: 31.3%
    IBM: 24.3%


    Is it THAT bad?


    I need my Warren Buffett blanket.
    6 Oct 2012, 01:37 PM Reply Like
  • Efmutton
    , contributor
    Comment (1) | Send Message
    I say this,you have to take everything these people say with a grain of salt.So many down a stock to get the price lower and then take action and BUY when the time is right.I can remember only to well when louis Rukeyser was alive and had his TV show,at the end of the year he had the TOP analysts on and they gave their pick for their BEST stock pick of the following year,well I bought and saw the company go completey broke quick,


    I joined a class action suit and was lucky to get back $1,200 of my investment...Use you own advice,(gut feeling) as stocks now-a-days for the most part move in tandem
    7 Oct 2012, 01:50 AM Reply Like
  • sreimer77
    , contributor
    Comments (242) | Send Message
    They're gonna earn 8 Billion with 10 Billion in free cash flows. They can take themselves private in 3 years.
    8 Oct 2012, 03:06 PM Reply Like
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