Investopedia: Would A Smaller HP Be A Better HP?

Summer is the time for idle rumors and speculation around the market, mainly because there's so little real news out there that nobody will be too hard on any new idea that floats by (hey, at least it's something to talk about). Prior to the Fourth of July holiday, the markets were briefly abuzz with the idea that Hewlett-Packard (NYSE:HPQ) should bow to pressure and split up some of its operations. Although it is probably not too likely (CEOs like to run bigger businesses, not smaller), it is an idea that is still worth exploring. 


Everything Old is New Again
This latest round of "how to make HP better" chatter is reportedly coming from a consortium of private equity groups (Blackstone (NYSE:BX), KKR (NYSE:KKR) and TPG Capital). While specifics are lacking, this group has noted the relatively poor valuation on HP's stock and suggested that the company could benefited from a strict diet - getting rid of the PC business and perhaps the printing unit as well.

Investors should realize, though, that this is not the first (or the likely the last) time such a move has been suggested. Journalists and commentators penned plenty of pieces in the wake of former CEO's Hurd messy departure that suggested HP should take that opportunity to become leaner and more focused. Going back even further, Merrill Lynch analyst Steven Milunovich penned a note in 2004 that recommended HP split in two, creating a consumer-focused company and a business/enterprise-focused company. 



To continue reading, please follow the link:
http://stocks.investopedia.com/stock-analysis/2011/Would-A-Smaller-HP-Be-A-Better-HP--HPQ-DELL-LXK-CAJ-AAPL0707.aspx