Wrong! Dispatches from the Front: Learning from Hewlett-Packard's Mistakes
By James J. Cramer
11/17/98 12:17 PM ET
The market has spoken: Hewlett-Packard (HWP:NYSE) sucks. Let's face it, every time we
think they've gotten it together, they shock us to the downside. Obviously, at this point, the
board should get involved and figure out what the heck is going on. As I own the HWP
November 60 calls (against some sale of common), I think I have spent my last nickel on this
company until the current regime gets the boot.
But that doesn't mean you can't learn from these guys. First of all, they are getting their butt
kicked, especially because they see no turn in East Asia, when everyone else has started to
see one. Someone is winning. My take, from calls we have made, is that Sun Microsystems
(SUNW:Nasdaq) is doing most of the winning.
Second, this HWP situation gives me growing conviction that IBM (IBM:NYSE), which
competes with HWP, must be doing many things right. I am long IBM, and I will buy more on a
no-rate-cut selloff.
Finally, I want to redouble my efforts on Compaq (CPQ:NYSE), which I am not long, because
they, too, could be doing better because of HWP's largesse.
The last stocks I made bets like this on were Nokia (NOK.A:NYSE ADR) and Ericsson
(ERICY:Nasdaq ADR) about 300% ago, when it was clear that Motorola (MOT:NYSE) was
falling apart. (I am now long Motorola and Nokia and no longer in Ericsson because Motorola
has regained momentum and Ericsson has lost it.) I think this Hewlett-Packard collapse adds
multiple points, if not revenues, to Sun Micro and IBM. That's worth the price of my HWP
calls. <Picture>
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James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. At the time
of publication, his fund was long IBM, Nokia, Motorola, Sun Microsystems and
Hewlett-Packard, though positions may change at any time. |
