Street Will Reward HP Layoffs

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.”

* You can find our HP conversation about 5 minutes into this video clip.

Posted by CNBC's Lee Brodie

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Trader disclosure: On May 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GLD; Josh Brown is long GDX; Josh Brown is long XLU; Tim Seymour is long BAC; Dan Nathan is long APPL JUN 550/520 PUT SPREADS; Dan Nathan is long IBM JULY 200/185 PUT SPREADS; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is long JAKK; Karen Finerman is short SPY; Karen Finerman is short MDY; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long MS CALLS; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long PEP; Pete Najarian is long HPQ; Pete Najarian is long FB

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