Unlock that value.
Following news and confirmation that HP will separate itself into two separate, public entities, investors sent its shares soaring more than 5 percent, to $36.87, at the end of regular trading. That’s a market cap gain of around $3 billion.
Investors are enthused that the company is working to unlock whatever value may have been hidden inside of the conglomerated firm.
HP’s printing and personal computing businesses will go into one bucket, while its enterprise hardware and services work will end up in a separate container. HP is pulling a Nokia.
Call me the cynical bastard that I am, but I am always skeptical of half of transactions like this. Ask yourself the following question: Which do you want more, eBay or PayPal? Right. Whenever people want to bust up some large corporation, I presume that they are looking to invest into that firm’s brightest spot at a cheaper implied price. They are not buying weak margin and, therefore, EPS baggage at the same time.
Don’t call it selfish. Call it business.
But here’s TechCrunch’s coverage of HP’s last quarter:
So which part is stronger? PCs? That part of the market is stable-ish, but hardly strong. So what piece of HP is being broken out? Your guess is as good as mine.
TechCrunch’s own Ron Miller is skeptical of the deal adding value:
The analyst class appears to expect the smaller companies to be more able to quickly execute and, in the eyes of Shebly Seyfrafi fof FBN securities, be larger “M&A” “opportunities.” He used “M&A permutations” in another interview. Presumably the implication there is that if you break HP into two pieces, the chance that someone buys one or the other increases.
I think that not a damn person knows how well these individual corporations are going to be able to execute, so I’ll spare any more jargon on the matter. That said, no divorce is clean.
