Ahh... to Be Hewlett-Packard (HPQ)
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Today Hewlett-Packard (NYSE: HPQ) announced it was stopping support for webOS. As many can recall, Hewlett-Packard only acquired webOS when it bought Palm last April for a mere $1.2 billion.
That's right, $1.2 billion.
Hewlett-Packard said it was looking to divest its Personal Systems Group, which some speculate could draw about $10 billion. So really, they're only getting about $8.8 billion. But that doesn't include other expenses related to production and marketing of webOS over the last year or so... all amounting to nothing.
Should investors speculate on the current news as the best move for Hewlett-Packard? Let's take a line from that Palm announcement, "The combination of Hewlett-Packard’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance Hewlett-Packard’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets." Well, they got the "highly profitable" part right -- profitable for Apple (Nasdaq: AAPL), Samsung, HTC, and Motorola (NYSE: MMI).
So what could you buy for $1.2 billion and get a better return? HP could have bought back nearly 32 million shares of its common stock, or even bought 4,587,000 shares of Apple common stock (ex-transaction costs), and made 38 percent back on the money. The company could have gotten 1,481,481,481 cans of Bud Light, drank them, had an amazing corporate-wide (likely county- or state-wide as well) party, and returned them in Michigan for $148.15 million (10 cent deposit). HP could have bought 3,672 Ferrari 599 GTB Fiorano's, driven them to work and back everyday for a year, and still made at least 40 percent of the money back upon resale.
Shares are 6.6 percent lower today.
That's right, $1.2 billion.
Hewlett-Packard said it was looking to divest its Personal Systems Group, which some speculate could draw about $10 billion. So really, they're only getting about $8.8 billion. But that doesn't include other expenses related to production and marketing of webOS over the last year or so... all amounting to nothing.
Should investors speculate on the current news as the best move for Hewlett-Packard? Let's take a line from that Palm announcement, "The combination of Hewlett-Packard’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance Hewlett-Packard’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets." Well, they got the "highly profitable" part right -- profitable for Apple (Nasdaq: AAPL), Samsung, HTC, and Motorola (NYSE: MMI).
So what could you buy for $1.2 billion and get a better return? HP could have bought back nearly 32 million shares of its common stock, or even bought 4,587,000 shares of Apple common stock (ex-transaction costs), and made 38 percent back on the money. The company could have gotten 1,481,481,481 cans of Bud Light, drank them, had an amazing corporate-wide (likely county- or state-wide as well) party, and returned them in Michigan for $148.15 million (10 cent deposit). HP could have bought 3,672 Ferrari 599 GTB Fiorano's, driven them to work and back everyday for a year, and still made at least 40 percent of the money back upon resale.
Shares are 6.6 percent lower today.
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