Is Hewlett-Packard really studying a breakup?

Maybe, a news report suggests, and it boosted the stock late Tuesday. But a breakup is just one option that HP's board may consider if it decides to formally study the question.

By Charley Blaine Feb 6, 2013 10:44AM
© ChinaFotoPress/ChinaFotoPress via Getty ImagesIt will be interesting to see how Hewlett-Packard (HPQ) shares react Wednesday after a report suggested the company was considering a breakup.

The report came out after Tuesday's close and, of course, after Dell (DELL) said it wants to go private in a $24 billion deal led by founder Michael Dell.

The HP news, which came from the Quartz site, was good enough to send shares soaring briefly as much as 11% to $18.43 at 4:30 p.m. ET. But additional reports suggest HP's board isn't close to making a decision. The AllThingsD blog reported one of its sources said HP directors are "not actively studying a plan to break the company up."

That was enough to knock the stock down a bit. The stock ended at $17.05 when after-hours trading ended. It had closed at $16.61 in regular trading, up 43 cents.

So let us recap. Quartz's report said the HP board "is studying a breakup of the U.S. tech company among several options the directors are considering to obtain maximum value for shareholders."

That's not quite the same as saying it is studying breaking the company up. Period.

In fact, the story went on to say the board is studying a breakup and "the merits of the company staying whole, since a recovery seems to be slowly taking hold."

HP shares are, in fact, up better than 46% since reaching an intraday bottom of $11.35 on Nov. 20.

In addition to writing that a split-up is not yet in the cards, AllThingsD's Arik Hesseldahl wrote late Tuesday that CEO Meg Whitman has maintained "consistently and unwaveringly" since June that remaking HP ultimately means keeping the company together, not breaking it up.

One would think HP's board would be thinking hard about what it will take to make shareholders happy. Oh, and ensure a future in an environment where personal computer sales are slumping in the face of stiff competition from Apple's (AAPL) iPad and other tablet devices.

The company is still trying to right itself after taking $18 billion in write-offs in 2012, mostly for two deals that proved way too costly.

The stock has been a disaster, falling 44.7% in 2012, 38.8% in 2011 and 18.3% in 2010. In all, the stock is down nearly 79% since its peak close of $78 in April 2000.

HP did study whether to break up the company. That is, in fact, what got former CEO Leo Apotheker fired. He proposed spinning off HP's personal computer business on Aug. 18, 2011. The next day, investors responded with such disdain that the shares fell as much as 23%.

Apotheker was gone in a bit more than a month, replaced by Whitman, the former eBay (EBAY) CEO and Republican candidate for governor of California.

More on moneyNOW

Feb 6, 2013 4:05PM
I just purchased a HP PC. Very good unit I must say. 
Feb 6, 2013 5:21PM
It is not a is broke and will be. There is no more-write offs. Much the same with many doing the write-off thing to protect stockholders past and present.  You all have to understand what mechanics are left...there are not many as the 'market' churns to protect. 
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?


[BRIEFING.COM] S&P futures vs fair value: -8.00. Nasdaq futures vs fair value: -19.00. Nasdaq at... NYSE Adv/Dec 0/0... Nasdaq Adv/Dec 0/0.