HPQ isn’t the only one receiving free advice though. Dell’s (DELL) stock price dropped dramatically following reporting weak earnings in its PC unit and out from the chorus of analysts emerged…you guessed it…calls for a breakup! Topeka Capital Market’s Brian White noted that “we believe Dell should consider getting rid of this [PC] business and focus on expanding its enterprise solutions business.” Now I can’t say that I had previously ever even heard of Topeka Capital Markets but it still counts. Here is a Motley Fool piece examining Dell’s worth ex-PC unit. It is worth noting that this appears to be a minority opinion within the analyst ‘community’ and others noted the importance of PCs to Dell’s business despite the really, really lousy margins. Michael Dell famously mocked the idea of H-P’s spinoff so it seems unlikely the company would pursue this strategy.
While we are obviously pro-spinoff and root for a healthy pipeline, more often than not these ‘calls’ end up leading nowhere. I expect every future weak earnings report will lead to this type of news, but who knows? Maybe it is the right idea and one will actually play out or perhaps some activist will get involved and force the issue.
Disclosure: Author holds no position in any stock mentioned.
