HPQ

Three Reasons Why Dividend Growth Investors Are Quite Savvy

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A version of this article appeared on our website on October 1, 2013. There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion ratio with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group in the age of ultra-low interest rates. #1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result … Read more

PC Shipments Expected To Stabilize

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According to data released by the International Data Corporation (IDC) Worldwide Quarterly PC Tracker on December 2, personal computer (PC) shipments are now expected to drop more than 10% in 2013, slightly below the previous projection of -9.7%. Though 2013 will be the most severe yearly contraction on record, this news wasn’t the key takeaway. Instead, it was expectations for stabilizing demand by 2015 that provided a shot of optimism to the PC supply chain (see image below). Image Source: IDC The commentary provided by IDC was not terribly exciting, but market expectations are closer to the PC going the way of the dodo than stabilizing at just over 300 million units (roughly 2008 levels). We continue to believe that … Read more

Housing, Hormel and Hewlett-Packard

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Tuesday brought about a nice S&P/Case-Shiller number and better-than-expected quarterly performance from Hormel Foods and Hewlett Packard. Though we liked the news, firms in our Best Ideas portfolio and Dividend Growth portfolio represent our best ideas at any time. Housing From press release: “Data through September 2013, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that the U.S. National Home Price Index rose 3.2% in the third quarter of 2013 and 11.2% over the last four quarters. In September 2013, the 10- and 20-City Composites gained 0.7% month-over-month and 13.3% year-over-year.” To continue reading >> Homebuilders: DHI, GFA, JOE, KBH, LEN, MDC, MTH, NVR, PHM, RYL, SPF, … Read more

Could IBM and Hewlett-Packard Be In a Bidding War for 3D Systems?

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First, it was reported on October 23 that Hewlett-Packard (HPQ) CEO Meg Whitman revealed that her company has plans to enter the 3D printer market in the middle of 2014. Whitman’s commentary was striking given the conviction in her intentions, which leads us to believe she is looking for a potential target that may fit well within HP labs’ research trajectory. The snail’s pace of internal innovation at Hewlett-Packard in recent years leads us to believe that Whitman will inevitably look to acquire the technology. It remains unclear, however, whether the executive suite at Hewlett-Packard has finalized the make-or-buy decision. Potential targets such as 3D Systems (DDD), Stratasys (SSYS), and ExOne (XONE) traded off on this particular news, as market participants took the … Read more

Guidance Drives Slump at HP

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After mostly pleasing the Street throughout much of CEO Meg Whitman’s tenure, tech hardware giant HP (click ticker for report: ) missed top-line estimates and provided a bleak outlook for fiscal year 2014. During its third quarter of fiscal 2013, revenue declined 8.2% year-over-year to $27.2 billion, while adjusted earnings per share fell 14% year-over-year to $0.86, right in-line with consensus estimates. Free cash flow for the quarter equaled $1.8 billion, or 6.6% of total revenue. Printing Revenue declines in the ‘Printing’ division weren’t too drastic during the third quarter, falling only 4% year-over-year to $5.8 billion, and the company was able to maintain segment margins at 15.6%. This drove operating profit of $908 million. Though the printing business’ top-line continues to … Read more

Blackberry: Strategic Alternatives Signal Failure

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After the launch of its new phone and operating system came and went without much fanfare, smartphone maker Blackberry (click ticker for report: ) announced that it is exploring strategic alternatives for the company. Although most tend to associate strategic alternatives with selling the company, Blackberry is also open to partnerships and joint-ventures. Let’s start with the obvious inference out of this news: Blackberry 10 didn’t save the company. If this wasn’t clear enough when Blackberry reported weak results for its fiscal year 2014 first quarter, we think the situation is obvious now. Consumers, particularly of the high-end smartphone variety, simply do not want Blackberry products. The app world is far inferior to competitors Apple (click ticker for report: ) … Read more

HP Generates More Cash As Its Business Shrinks

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Legacy hardware OEM Hewlett Packard (click ticker for report: ) reported strong cash flow for its second quarter Wednesday afternoon even though the business continues to shrink. Revenue declined 10% (9% ex-currency) year-over-year to $27.6 billion, falling short of consensus estimates. Non-GAAP earnings per share declined 11% year-over-year to $0.87, which was actually slightly better than previous guidance as well as consensus expectations. More impressively, operating cash flow was 44% higher compared to the year prior at $3.6 billion, driving free cash flow of $2.8 billion, which the company used to repurchase shares and to boost its quarterly dividend 10% sequentially (to 14.52 cents per share). Image Source: HPQ Although CEO Meg Whitman’s turnaround continues to progress at a solid … Read more

Intel’s New Management Team Looks Fit for the Challenge

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Earlier this morning, Best Ideas and Dividend Growth Newsletters holding Intel (click ticker for report: ) announced that it has ended its search to find a replacement for current President and CEO Paul Otellini. Stepping into the CEO role will be current COO Brian Krzanich, while Renee James will take the helm as President. Krzanich appears to be a typical Intel hire, in our view. Every Intel CEO has come from within after spending several years at the firm. Krzanich joined the company in 1982, and has since held various roles throughout the development and business side of the firm. His expertise lies in manufacturing, which has been a crown jewel of Intel’s competitive advantage over the past several years. … Read more

HP’s Turnaround Plugs Along

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After its fourth quarter revealed the Autonomy scandal, Hewlett-Packard (click ticker for report: ) announced decent first-quarter results for its 2013 fiscal year. Revenue fell 6% year-over-year to $28.4 billion, which was actually far better than consensus estimates. Earnings also fell, down 11% year-over-year to $0.82 per share. However, the number beat consensus, and it also exceeded HP’s internal guidance (Image Source: HPQ). On a geographic basis, we were pleased to see the pace of HP’s revenue declines moderate across the board, except for Europe (only Asia-Pacific posted growth—of 1%). The enterprise technology space is tempered, and we believe demand will improve once economic conditions cooperate (Image Source: HPQ). The firm’s Personal Systems segment continued to experience profit deterioration, with margins falling 250 basis … Read more

Microsoft Remains a Terrific Company

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Dividend Growth Newsletter portfolio holding Microsoft (click ticker for report: ) reported solid second-quarter fiscal 2013 results Thursday afternoon. Revenue jumped 3% year-over-year (5% non-GAAP) to $21.5 billion, roughly in line with consensus figures. Earnings per share declined 3% year-over-year (+4% non-GAAP) to $0.76 per share, a penny better than the consensus estimate. The performance from the Windows Division was relatively strong, in our view. 60 million Windows 8 licenses sold is a pretty solid number (as the image below shows), though we think the company (and the industry) would have liked to see the new operating system perform better (Image Source: Microsoft 2Q Earnings Presentation). We place a lot of the blame on the OEMs such as Dell (click ticker for … Read more