Re HPQ - fair enough, I agree that a stock can be too cheap to ignore, even with warts. I am not sure if HPQ is there but I invested in MRVL on the same premise.
I believe the printer business has a huge secular headwind, in that the printing process itself is replaced by storing the documents digitally and displaying photos predomantly on LCD screens (ipads, TV's, computer sceens). We observed this with my wife (an avid photographer) and myself, where we just don't print the pictures any more. At work, The printer has become a combined printer/scanner/fax machine on a network and instead of printing stuff, I'll just let it create PDF's and sent them per email. My printing volume has gone down by ~70% probably suring the last few years. For Photo's, aside from color issues, I can get great displays on our TV screen that. I think this is a secular trend, that after creating pics went digital, now storing and looking at the photos will change too.
So my guess is that people will still have a printer, but use it much less since printers are a razor/blade business model, where the profit is in the blade side, it means that the profits from this business pretty much are bound to come under severe pressure. My take is that this is going to be worse than PC's which I think are going to be much harder to replace.
Going back to HPQ, I do think that Whitman is a better choice and hopefully will be able to steady the ship. What I am watching for with HPQ is new products that are exiting customers again. A company like HPQ need to have that but as far I know, they haven't come up with something really new in a decade. |
