Two Tech Favorites Going Nowhere Fast: Top Analyst
They may be popular with investors, but if you’re a tech investor UBS says you won’t find gains with these two widely held stocks.
They are Hewlett Packard and Dell.
Analyst Steve Milunovich says stay away from HP because "they have too much of an identity crisis. They’re trying to be both a consumer and corporate computer company.” And that he says is a problem.
Also he thinks the decision by CEO Meg Whitman to not spin-off the PC business will drag down the bottom line. “Those assets are declining in value. It’s a great business but it’s peaked. It will come under pressure from tablet competitors going forward.”
And even though the stock is down 26% ytd he thinks it goes even lower. “We think there are a couple more points to the downside,” he says.
Trader Brian Kelly doesn’t agree.
“If you want a cheap stock, I’d look at this name. In fact, if you think Meg Whitman can turn around the company – it's not a bad place to get in.”
Although Milunovich thinks long-term Dell’s prospects look good in the short-term, he sees trouble.
“What makes me somewhat optimistic is that they’ve made some interesting acquisitions," he says. And he likes that Michael Dell is leading the charge to change the company from a direct seller of PCs to an enterprise business.
In 3-5 years the synergy should come together. "That will be interesting,” he says.
In the meantime, he says, the PC business is probably going to be under pressure.” And that should drag down shares.
Trader Mike Murphy, founder and managing partner at Rosecliff Capital, doesn't see the long-term potential. He believes Apple is so strong, Mac wins greater market share to the detriment of all rivals. "I'd much rather own Apple than either Dell or Hp."
Posted by CNBC's Lee Brodie
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Trader disclosure: On August 7, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Mike Murphy is long DNKN; Mike Murphy is long SBUX; Steve Weiss is long X; Steve Weiss is long WLT; Steve Weiss is long QCOM; Steve Weiss is long JPM; Steve Weiss is long CAT; Steve Weiss is long WLP; Steve Weiss is short AAPL PUTS; Steve Weiss is short JCP; Brian Kelly is long CAT; Brian Kelly is long WY; Brian Kelly is long MON; Brian Kelly is long EUROSTOXX 50; Brian Kelly is long WFC; Brian Kelly is long XHB; Brian Kelly is long USG
For Steve Milunovich
Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity: DELL
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided: DELL
UBS makes a market in the securities and/or ADRs of DELL
UBS Securities LLC makes a market in the securities and/or ADRs of this company: HPQ
Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity: HPQ
For Jeff Kilburg
Nothing to disclose
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