Beleaguered Hewlett Packard landed on the Fast Money trader radar largely due to chatter that Oracle might be looking to make an offer.
In an interview on CNBC, Nomura analyst Rick Sherlund made a stunning call. He said, “There's been speculation that Oracle could have an interest in Hewlett Packard. I ran the numbers, they could pay a 50% premium and it would be 30% accretive.”
Although anything is possible, the Fast traders are skeptical.
”Interest rates are near zero for a borrower such as Oracle, explains Karen Finerman, so they can afford to pay a big premium. But that doesn’t mean they’ll do it."
However, "CEO Larry Ellison is a bit of a wild card. You never know what he'll do, but I think they can stay on the sidelines and just watch HP blow themselves up."
Guy Adami agrees that the most likely scenario is that Oracle does nothing. ”A 50% premium seems a little high to me,” he says.
However there's always the Mark Hurd factor - with the former HP CEO now working for Ellison, an acquisition isn't entirely out of the question. As a result, the traders would not try to ride this rumor. Instead they suggests looking elsewhere in the space.
”I’d play software long Red Hat or Salesforece.com,” adds Joe Terranova. “Historically software in September has been good trade.”
Tim Seymour prefers an overseas name. ”I’d play it SAP,” he counters.
BEST BUY DOT-COM BUST?
Best Buy has announced that it will sell other online retailers products through its website in an effort to steal customers from web based rivals (such as Amazon).
But is it too little too late for Best Buy? Hear from CNBC's Herb Greenberg. Watch the video now!
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Trader disclosure: On Sep 8, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" trader; Seymour owns (AAPL); Seymour owns (BAC); Seymour owns (INTC); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman owns (AAPL); Finerman owns (BAC); Finerman owns (JPM); Finerman owns (GOOG)
For Karen Finerman
Finerman and Finerman’s firm own (AAPL)
Finerman’s firm own (BAC) leaps
Finerman’s firm owns (JPM) stock and (JPM) leaps
Finerman’s firm owns (IBM)
For Brian Stutland
Stutland Equities is a market maker holding positions in (VIX) futures and options and (VXX) stock and options
Stutland Equities holds hedged option positions in (SPX) and (SPY)
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