Icahn may be buying into HP

Or maybe not. That has been the speculation Monday as HP continues a rally after nearly falling to $11 last month.

By Charley Blaine Dec 10, 2012 4:04PM
© Scott Eells/Bloomberg via Getty ImagesNo one can say for sure if corporate raider Carl Icahn is gunning for Hewlett-Packard (HPQ). That's the story making the rounds on Twitter and elsewhere.

But the fact is Icahn hasn't filed anything with the Securities and Exchange Commission. He doesn't have to until he owns 5% of the stock. And the lack of disclosure has cooled off the speculation.

The stock was up 32 cents to $14.13 by 2:30 p.m. ET Monday after topping out at $14.59.

But this much we can say. Someone has been buying HP. It is up nearly 25% since bottoming on an intraday basis at $11.35 on Nov. 20, the day it disclosed it was writing off $8.8 billion of its $11 billion investment in British software company Autonomy.

HP officials say they were misled about the true state of Autonomy's finances. Former Autonomy executives dispute the charge, and the dispute could end up in a courtroom near you.
Meanwhile, the volume in HP is up, too. By 2:15 p.m. Monday, 37 million shares had changed hands. The daily average since July 2 has been 26 million shares. That includes Oct. 3, when 141 million shares were traded, and Nov. 20, when volume hit 154 million shares.

It could be Icahn, and lots of people on Wall Street know that just intimating Icahn is up to something can set off buying hysteria in a stock. He has taken a big stake in Netflix (NFLX). He made an unsuccessful run at truck-maker Oshkosh (OSK). Shares of both jumped when he started to move.

HP, meanwhile, is vulnerable. It has written off more than $17 billion in investments in two companies, Electronic Data Systems and Autonomy, this year alone. The stock is down 45% for the year and nearly 81% since its closing peak of $74.06 in April 2000. That's more than 12 years ago.

Still, it would take a little doing to buy 5% of HP, which translates into 98.5 million shares. It would require an investment of $1.43 billion. Icahn could borrow some of the money to buy the shares. But, still, it means a lot cash and a game plan on how to exit the trade. It's not clear what the game plan would be. He doesn't like being an owner-operator.

But if it isn't Icahn, who's buying and why? The short answer may be everyone is buying HP because they sense that the electronics giant may get broken up. Reuters Breakingviews thinks the company is worth twice its market capitalization -- or about $52 billion or so -- if sold off in pieces. Here's how Reuters' Rob Cox and Robert Cyran break it down:
  • Computer business: $9 billion
  • Printers: $9 billion
  • Enterprise and servers: $22 billion.
  • Services: $17 billion
  • Software: $11 billion.
Net of debt, the company may be worth $52 billion. We'll see.

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Tags: Investing
4Comments
Dec 10, 2012 4:46PM
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ICahn... HP... yawn. Some old geezer buying into another Meg Whitman atrocity. So what? The days of billionaires doing bozo things instead of deploying that cash where it could actually do good is over. Fry them octogenarians and GET RID of them!!! What the heck, we're freaking out about a Fiscal Cliff Sunday, writing about geezers on Monday and pumping Fed cash into the markets on Wednesday. LET'S STOP THIS STUPIDITY. Recall Republicans and let's recover America.

Not every stupid person is Republican but you have to be pretty stupid to be a Republican.

Dec 10, 2012 4:39PM
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So tomorrow is the official protest over Michigan's deadbeat Congress slapping together a Right to Work piece of shipt legislation that the Governor is already whacking off to sign so he can appease his puppet-master-- DICK DeVos, the inheritor of AMWAY. Yea that's right, the multi-level marketing business that pumps beauty products made in China. Michigan still mainly makes cars and has a massive number of union employees. Without unionization, the likelihood of lesser quality due to suppression of wages and appropriate worker conditions would guarantee a loss of world market share. Figure it out... China doesn't pay well, care much for worker safety or conditions but they do make a really cheap cruddy facsimile of stuff we used to make well-- here in America. There will always be another country willing to suppress a workforce and press it into slave production. The Fate of quality hangs in the lurch. Help us... help Michigan by adding your voice. Our LOUSY Governor is already pushing a bridge project we don't need through and his allowance of fireworks this years caused MASSIVE damage, not to mention those damaged by wearing no helmet on their motorcycle (I know one personally). We aren't interested in New World World. Either you ignore what's happening until it happens to you and there is no one left to stop it... or YOU WAKE UP AND STOP IT before it can spread more. A nation of Order has no Freedom.
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