Lately, the Street hasn’t liked layoffs, but top trader Pete Najarian says the Hewlett Packard layoffs will be the exception to that rule.
After the bell, Hewlett Packard said it would lay-off 27,000 workers or 8 percent of its employees by October 2014.
OptionMonster Pete Najarian concedes it’s a terrible development for the people who are losing their jobs, but he also believes the Street will reward the stock.
Najarian calls it a bold move on the part of CEO Meg Whitman and says, “Now we know what Meg Whitman intends to do. Now we know about the company’s direction.”
Najarian says that in the near-term, he takes the layoffs as a sign that Whitman intends to “make the company more efficient.” The lay-offs are expected to save as much as $3.5 billion.
And looking at the nature of the cuts, Najarian says they reveal where Whitman intends to put her focus -- "On the cloud, big data and security. That's where they’re going.”
Najarian also thinks the stock is been sold so hard, that even with a small degree of clarity, the Street will consider it oversold. “Even after a 10% pop in extended trade, I think it goes even higher.”
Trader Karen Finerman confirms the argument. Although she concedes HP has been dead money lately, “if they are turning a corner the stock is extremely cheap,” she says.
Tim Seymour also agrees. “It’s going to take years to turn around – but I think you can begin to look at this story.”
Trader Josh Brown, however, just can’t get behind the trade. “I think it’s a fine company and one that’s very important to our nation but chances are you have a limited amount of capital to invest and there are much better places to put money to work than HP.”