meg whitman

3

Another top Republican is voting for Hillary Clinton

Hillary Clinton added yet another big name to the list of prominent Republican supporters on Tuesday when Hewlett Packard CEO and former California gubernatorial candidate Meg Whitman announced she will back Clinton over Trump, whom she called “reckless,” a “demagogue” and a threat to democracy. 

Whitman is the fourth high-profile Republican to back Clinton this week.

British Firms Are Staying Positive Ahead of Brexit Negotiations

U.K. firms are planning to hire more than their global counterparts and Britain’s popularity among overseas investors is rising, according to PricewaterhouseCoopers LLP.

A PwC survey of over 1,300 executives shows that 95 percent of British companies are optimistic about their own prospects over the next three years. They’re not as cheery about the global economy though: only 17 percent expect world growth to improve in 2017, down from 30 percent last year. Economic uncertainty, exchange-rate volatility and the future of the euro area were all cited by U.K. executives as risks to company growth.

The findings are being published at the World Economic Forum in the Alpine resort town of Davos, an annual gathering of billionaires and political elites. Aerospace giant BAE Systems Plc and Aberdeen Asset Management are among the British firms attending, alongside U.K.  Prime Minister Theresa May and executives from around the world including Frans van Houten of Royal Philips NV and Meg Whitman, CEO and President of Hewlett Packard Enterprise Co.

More from Bloomberg.com: Soccer Is Losing Its Grip on TV

The report shows British executives are so far largely unperturbed by the country’s June vote to leave the European Union. Warnings of an economic slowdown from the IMF, the OECD and the Bank of England have so far not fully materialized. However, inflation is set to pick up this year, and much of the economic impact will depend on what sort of deal Theresa May secures with European leaders.

The prime minister will set out her vision for the U.K.’s new relationship with the bloc in a speech on Tuesday and is likely to signal that she’s willing to quit the single market for goods and services in order to regain control of Britain’s borders and laws, according to reports over the weekend.

More from Bloomberg.com: Sterling Options Signal More Turmoil as May Speech, Ruling Loom

Access to skills is considered the biggest threat for British business, a concern that’s risen since last year, according to the report. Even so, 63 percent of the U.K. bosses surveyed expect to grow their workforce over the coming year, compared to 52 percent of other countries.

“We may face a period of uncertainty, but the economic fundamentals remain positive,” said Kevin Ellis, chairman and senior partner at PwC. “U.K. CEOs are resilient and realistic about the challenges ahead – maintaining a positive mindset and staying focused on what they can control is vital.”

More from Bloomberg.com: China’s Latest Innovation? The Ballpoint Pen.

More from Bloomberg.com

Read British Firms Are Staying Positive Ahead of Brexit Negotiations on bloomberg.com

Meg Whitman is now HP's CEO?

- I’m still trying to get my head around this one

- Facts: Leo Apotheker had been at HP for 11 months. His strategy for spinning off the PC business and acquiring Autonomy was approved by the board.  Many of those same board members had actually been appointed during Apotheker’s tenure (not saying they’re loyal to him, just that he was likely at least involved in the selection process).

- I’m confident there’s more details to come about why the board felt this was the right time to remove Apotheker as CEO, despite continuing to maintain the strategy he had laid out

- Initial reasons being mentioned in the press for his demise include a lack of confidence in his ability to communicate the company’s strategy internally and to Wall Street (not helped by multiple earnings revisions) and senior HP managers that have been disgruntled with his leadership thus far

- This is where I would normally include a link to the best article I’ve found, but at this point you can pick your favorite business news site because they’ve all got something

We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead.
—  HP Executive Chairman of the board Ray Lane • Discussing the reason to ditch Leo Apotheker as CEO and replace him with former eBay CEO Meg Whitman. What do you guys think of this move? Will this be enough to make up for the TouchPad idiocy? Will she move HP back in a consumer direction, after Apotheker tried to move it towards enterprise services?
Dear Meg Whitman

Once again the state of webOS is hanging by a thread of some new take-over. However, this time it is a change in CEO, and not a buyout of Palm. HP has hired you, Mrs. Whitman, as their 3rd CEO in just under 18 months. You are coming into a huge company at a crucial time of transition, and I would just like to voice my feelings of how this effects my favorite mobile platform.

WebOS was ultimately sent to the back burner by your predecessor, Leo Apotheker, with the decision to stop making webOS hardware. You have the chance to do a great thing and try to regain mind-share in the ever growing mobile space. To do this you NEED webOS! I feel with a few resurgent moves, you can bring webOS back into the game.

First, make the announcement that the Personal Systems Group(PSG) is not spinning off from HP. Enterprise is a solid revenue for you, but the PSG is the HP that the general public knows and associates with your logo. You need this image to go forward and stop the downward spiral Apotheker started back in August.

Release the Pre 3. I have been using this device as my daily driver for over a week, and, by far, this is the best webOS phone ever produced. It is fast, and has the larger screen everyone has been dying for. The build quality of the phone is superb. Maybe the Pre 3 can’t go head-to-head with some of the newer Android phones with outrageous specs, but it is on par with the iPhone when it comes to user experience. This phone should make it to the hands of the consumers who were waiting for it.

Go forward with Touchpad Go. A 7-inch device has a chance in the growing tablet market. It gives a strong alternative to the larger screens and could compete nicely with the Amazon Fire and Nook Color as an e-reader. The compact design and rumored built in GPS could offer consumers a great on the Go tablet device.

Last, get a smartphone on Sprint. This is where your die-hard webOS users have championed the platform from the beginning. They waited, and waited, and waited for a device to replace the original Pre, and they are still waiting. It would be outstanding to get the often rumored 4-inch slab phone we’ve all heard was in the pipeline in the hands of Dan Hesse. The evangelists of the webOS community deserve to have this made right as promised. I don’t care if you just sell an unlocked CDMA model of the Pre 3 that could be activated on Sprint’s network, but it needs to happen.

So, there you are Mrs. Whitman. I hope you are paying attention to the outcries of your slimming community. People are moving on with this uncertain future. Your window to rebound is closing, and you need to move quickly. All we ask is that you don’t give up on webOS and Palm. HP saw a 1.6 billion dollar value in them for a reason. I hope you can see it too.

Meg Whitman prepared to spend $140 million running for Oakland School Board in 2014

A source told Oakland Unseen that Meg Whitman is prepared to spend $140 million running for Oakland School Board, on the heels of her spending the same amount of her own money in her failed bid in California’s 2010 gubernatorial election. Our source also said that Whitman intends to spend all of the money on direct mailers to Oakland’s 400,000 residents. We are reaching out to Whitman’s campaign to confirm and will update shortly.

HP Splits in Two - Sell the News!

By David Nelson, CFA

Something was bound to happen at HP so it seems fitting we’d get a breaking story of a large reorganization just days before their analyst meeting on October 8th. For weeks there have been rumors Hewlett Packard (HPQ) was considering a merger with EMC (EMC). Apparently those talks broke down.

I suppose a split up of the company separating their PC Business from Enterprise is to be expected on the heels of several large Tech companies announcing similar moves. It’s all the rage. If you want to get some traction in your shares spin something off. Just recently HP Chief Executive Meg Whtiman’s former employer EBay (EBAY) announced the spin-off of its fast growing Pay Pal unit. Announcements like this have been well received by investors so I’m guessing the knee jerk reaction will be a pop in the stock.

Ms. Whitman previously decided against a breakup and at least up until recently believed having a company that “can take you from the device to the data center” was an advantage. As reported in the WSJ and the New York Times this isn’t the first time management considered a move. Her predecessor Leo Apotheker pushed for this in 2011 just before being ousted on the heels of the disastrous Autonomy acquisition.

Value vs Growth

This is a company that value investors’ love and growth investors hate. The value guys point to a tech company trading at just 8.9x 2015 earnings, obviously a lot cheaper than the sector as a whole. The closest comp is probably IBM (IBM) trading at 9.5 next year’s earnings. There’s a lot of noise in that number considering the $3.95 consensus 2015 estimate for (HPQ) is 24% higher than GAAP. (Generally Accepted Accounting Principles)

There’s little here for growth investors to get excited about. Revenue has been declining for some time and current estimates show little growth for the next few years.

I think Meg Whitman has done an excellent job stabilizing the company but she’s obviously come to the conclusion that little can be done in its present form, hence the big announcement. For investors, reorganization is only positive if the units on their own can do better than as a combined company. That’s the message Meg will have to sell after the official announcement.

The Abyss

For those brave enough to dive into the Abyss and purchase the stock in the low teens, congratulations! Rumors of HP’s demise were obviously exaggerated. 

The chart below paints an interesting picture. We see two distinct channels each with their own story. The first part of the monster 300% move off the bottom was the realization that HP wasn’t going out of business anytime soon. The second channel points to some signs of stabilization. Meg has managed to stop the decline in EBIT margins (Earnings Before Interest & Taxes) and through cost cutting and layoffs even show slight earnings improvement.

What do you do with the stock now?

If your decision is to stay on board you’ll have to ask yourself; do I want to keep both stocks after the split-up?

PC Business

According to Research Firm IDC, HP is losing market share and has slipped behind Lenovo to number two in personal computers. The lap-top market continues to be a tough space and for my money their focus has to be on the low end. Just sit for five minutes in any Starbucks (SBUX) and I guarantee you’ll see more Mac Books than HP Laptops. Why limit yourself to one operating system like Microsoft (MSFT) Windows when you can get a Mac and run both at the same time.

Printers are of course a cash cow but when I look at several sell-side models even here I see projections of modest revenue declines for the next few years.

Enterprise

No growth here either. Sell-side models like Bill Shope’s at Goldman Sachs shows a decline in Enterprise Services at least for next year with the only bright spot being software. One look at the macro picture outside the U.S. isn’t encouraging. Oh yeah, a surging U.S. dollar only adds to the pain.

Summary

Ok, so it’s a value play but even turnarounds like HP at some point have to find sales growth. As we’ve seen in other large cap names like IBM, that can only last for so long. If you must own one of the stocks choose the enterprise spin-off.

Bulls on HP have targets that mostly center around 40 or about 10x 2015 earnings. The Wall Street dance will be for analysts to move their targets higher. But ask yourself. What’s really changed here? I don’t see the split-up substantially changing the growth profile of either division.

Sustainable revenue growth will only come from product innovation or an acquisition. Show me that and maybe I’ll get on board. Until then - SELL THE NEWS.