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Technology Stocks : Hewlett-Packard (HPQ)
HPQ 22.48-1.0%Nov 19 3:59 PM EST
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To: KAD who wrote (3467)6/10/2004 8:49:21 AM
From: Elroy  Read Replies (1) of 4345
 
PCs and printers go hand in hand -- they share a lot of the same core technology, plus common distribution and marketing channels.

Nonsense.

What core technologies do PCs (Processor speed, graphics capability, low cost manufacturing skill set) share with printers (dots per inch, color, laser engines)?

Dividing expenses like R&D and the cost of maintaining a global presence would add to the overall costs of doing business -- without adding any revenues.

Wrong again - I don't think HPQ has a single R&D employee that is working on both the PC and printing products. The technologies of the two divisions is different, and the engineers are different as well.

To experience full upside from a spinoff, investors might have to wait an awfully long time before the process is completed.

Nonsense again. If HPQ were to spin out its printing division into a separate publicly traded company, and that new company's stock received a premium to LXK's multiple (deservedly so, since HPQ's printing division is 5x as large
as LXK and more profitable), the new company would immediately be worth more than HPQ's current valuation. And shareholders would also have the remaining service and hardware division of HPQ (70% of revenue) as well. The shareholders could benefit IMMEDIATELY if the valuation of the printing division were recognized (it is undervalued today when it is buried in the rest of HPQ).

Elroy
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