HP Shares Slip Following Microsoft Earnings Miss
Since the start of 2013, shares of Hewlett-Packard have been on a tear. After bottoming out at $11.71 late last year, the shares have risen by more than 80 percent since the start of 2013, making it the best performing stock to own on the Dow 30.
Today, all the negative vibes surrounding the PC business finally caught up to HP. Yesterday’s earnings miss by software giant Microsoft is turning out to be a negative read-through on the world’s number two PC maker.
As of 11:20 am ET, HP shares were down more than one dollar, or nearly four percent, to $25.33 a share. Before today, HP shares had seemed to defy the persistent woes that have been lingering over the industry like a bad smell. Last week when the market research firms Gartner and IDC reported that HP had fallen to China’s Lenovo as the world’s top PC vendor during the second quarter, its shares didn’t fall.
As the buyout drama surrounding Dell has played out and focused heavily on that company’s exposure to the declining PC business, HP shares have continued to climb.
Even when the chipmaker Intel reported quarterly earnings that were short of the already pared-back expectations of Wall Street analysts, HP shares stayed relatively buoyant. Perhaps solid results from IBM, a key HP rival in the enterprise computing and services space, helped offset any spillover in worry from Intel.
Finally, it took word from Microsoft that not only had it missed expectations, but that it was taking a $900 million charge on unsold Surface RT tablets, to bring HP shares back down. HP has been trying to get traction for its Elite Pad hybrid tablet device. A lot of hopes for a recovery among the traditional PC vendors have been pinned on tablets. If Microsoft is having trouble selling one of the higher-profile devices in the category, it probably doesn’t mean good things for HP.
Of course, it could be worse. Even with today’s drop, the shares are still up more than 77 percent since the start of the year, making it far and away the best-performing stock on the Dow this year.