Hewlett-Packard Will Tank Without Firm PC Grip

| About: HP Inc. (HPQ)
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In an age where computing is at an all-time high you'd think that outfits like Hewlett-Packard (NYSE:HPQ) would seem like a good stock to back. Yet, the company's recent lack of success has come as no surprise.

Right now, Hewlett-Packard is just trying to stay afloat and ahead of the trend. Case in point: it has just recently announced that it is eliminating close to 30,000 jobs because of "dwindling demand for personal computers." This is sad news when you consider the fact that the company has long held a good chunk of market share in supplying people with computers. You can attribute its loss to the gain of tablets and smartphones.

Of course, it is not only Hewlett-Packard that is feeling the heat. Competitors like Super Micro Computer (NASDAQ:SMCI) are launching new server solutions that will help its customers even more, probably in response to the growing shift of people when it comes to technology and how computing is done today.

Lenovo (OTCPK:LNVGY), another rival of Hewlett-Packard in the PC sales business, is also trying to move some of its demand needs. It is considering outsourcing production of its PCs to an NEC plant in Japan. This is not yet a sure thing, but it seems to be something that the company really wants to do, given that it wants to move over into smartphones as well, because it seems to be the best market right now.

Last, but certainly not the least of the rivals of Hewlett-Packard feeling the crunch from the lowered demands, is a company that has a name that people all know but may not necessarily love: Dell (DELL). Dell is trying to go in a new direction with the way it uses technology, using its resources for medical purposes. This is really good when you consider the fact that it is trying to venture into fields that tablet computing will not be in for a while (remember that PCs, however hard they are to transport, generally have more processing power because of their heft) and this is forward thinking for a company that may be feeling the same crunch that Hewlett Packard is feeling. Dell's move to work toward fields that will still prefer PCs may be wise, but if tablet computing power can increase, Dell may find itself having invested in yet another dwindling corner of the industry.

Of course, it does not help as well that both Dell and Hewlett-Packard are not expected to profit from the release of the newest Windows software, as it "will prove to be a disappointment," so says one expert in the field. You know that it's a tough year when you have to let go of a whole lot of personnel and at the same time find your expectations not having been realized. The Windows release should have garnered some excitement from the industry, but it seems to be a flailing effort, at least for now, in the face of an industry moving away from these standards.

When you add that bit of disappointment to the fact that Hewlett Packard recently lost a whopping $190 million in tax refunds with the IRS, there is going to be a definite blow to the company. In light of all of this bad news, one might think it'd be high time to drop the stock and re-focus. Yet, I think it may just be the right time to hold on to Hewlett Packard, or possibly even increase your shares.

Why is that? For one, the stock is one of the cheaper risks that you can undertake on the market right now. It has proven to have stable growth for a few years and history would tend to indicate that companies don't just suddenly up and die (unless, perhaps, it is an investment bank and it's overextended in derivatives, but this is a PC sales company) without good reason.

And, it's not like Hewlett Packard is not battling back. It has just aided T-Mobile in its attempt to improve marketing efforts toward its clients by giving it better infrastructure on its databases. This is certainly good news because just like Dell, it is trying to increase its ventures into the fields that the smartphones and the tablets are not able to penetrate just yet. Also, its new data center installation is something to behold and is a testament to the company's commitment to give the best service it can provide while ensuring energy efficiency.

That does not mean that it has stopped making products as well. In fact, it just recently launched a set of new business-driven PCs, in addition to solutions that every new business will want to have. This is actually a very smart move on its part, as it has targeted a market that is not really in need of tablets or smartphones. Businesses still need the heavy processing powers of PCs in order to store data, and innovations like this is what will ensure that even though the cloud looks dark, Hewlett-Packard will have a silver lining to lean on.

So, while the stock may not be the hot ticket item you should rush to get in on, it may be a solid investment for the right price. PC power has yet to be touched by tablets, so while the company lost a significant customer base in personal computing, there is still strong demand for its products. The question will be if Hewlett-Packard can be the top dog in the dwindling industry and hold on to that customer base. If it can do this, and couple that with ventures into newer areas of computing, it will survive and possibly do so quite well. If it slips and lets Dell, for instance, take over in computing and lets it get to newer thresholds quicker, it may be a long way down for Hewlett-Packard.

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