CNBC Stock Blog

HP Must Recommit to PCs: Jefferies Analyst

Hewlett-Packard has to recommit to selling personal computers to repair the damage done by its previous chairman, Jefferies & Co. senior tech analyst Peter Misek told CNBC Wednesday.

"They absolutely have to recommit to PCs," said Misek, who has a "buy" rating on the company and a $40 price target on the stock. "They’ve had PC sales implode both in China and emerging markets since they announced that ill-fated decision in August."

HP named former eBay CEO Meg Whitmanto replace fired CEO Leo Apotheker in September, a month after he announced the possible spin-off of its PC division and the planned acquisition of British software maker Autonomy. The news had an immediate negative impact on HP shares .

HP: Split or Not to Split

A day after the Whitman announcement, HP Chairman Ray Lane told CNBC the PC business is not for sale.

That hasn't stopped the speculation about a spin-off, however, and Misek said he wrote a long memo to Whitman outlining a number of strategies HP could take to fix the ailing company.

If HP doesn't want to "fully recommit" to PC it could have a private-equity firm come in, take a 60 percent to 70 percent stake and use the cash — approximately $5 billion, he reckons — to buy back shares.

That would "placate shareholders a bit," the analyst said. "But you want to keep the supply chains integrated because component costs on the server side and on the printer side have a lot of synergies. Bundling printers [with PCs] also has a lot of synergies. You wouldn’t want [a PC company] completely separate."

If Whitman can refocus the troops and "get some more optimism back, they probably retake market share," he said.


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Disclosure information was not available for Peter Misek or his company.