2HRS2GO: HP needs super performance from Superdome

3 min read

Tuesday ramblings:

For all the discussion about Hewlett-Packard (NYSE: HWP) and its attempt to buy the consulting arm of Pricewaterhousecoopers, Wall Street seems relatively placid about the idea.

HP shares have fallen more than 8 percent since the company confirmed it was negotiating to buy the Pricewaterhouse unit, but that's not too much when you consider the $17 billion to $18 billion price tag. HP is proposing a stock-and-cash deal, so the exact dilution isn't known, but you can be sure it'll be considerably higher than 9 percent.

Given that HP's stock price hasn't fallen that far, it's clear that investors have faith in CEO Carly Fiorina's ability to manage the acquisition and wring value out of it quickly. So do I.

But that's down the road. What would boost HWP shares in the next few months would be data showing strong sales of HP's high end Superdome servers, which formally debuted today. Unix server growth was the locus of concern during the company's third quarter conference call; alleviating that worry would go a long way toward soothing analysts' anxieties. HP says Superdome will produce measurable income starting in the fiscal first quarter.

The F****dcompany.com website looks f****d itself, since the owner is selling it on eBay (Nasdaq: EBAY). There's only one appropriate reward for entertaining so many people with tales of corporate misery: shares of every company mentioned on the website.

So it's okay to monopolize buying but not selling? Federal regulators are sending that message, with their willingness to let Covisint proceed, while preventing some large corporate mergers.

The Federal Trade Commission says it will closely monitor the online purchasing exchange formed by the Big Three automakers, but the fact that it let the matter pass without restriction indicates the FTC doesn't foresee any major problems.

I don't either. The economies of scale and efficiencies enabled by Internet B2B for auto parts should lower consumer prices, which is ultimately what matters.

But what's a supplier to the Ford (NYSE: F) or General Motors (NYSE: GM) or DaimlerChrysler (NYSE: DCX) supposed to think? Competition involves playing one party against another; you largely eliminate that with such a massive B2B network.

At the other end of the antitrust spectrum, none of the mergers getting a hard look from the Feds -- AOL-Time Warner comes to mind, as does the Worldcom-Sprint combination killed earlier this year -- would have created a company without competitors. If anything, the competition is getting worse in communications, to the point where companies that don't find larger scale somehow will be in very real danger.

PRI Automation (Nasdaq: PRIA) became the second chip capital equipment vendor in five days to preannounce an earnings miss.

However, don't look for an industry trend. Both PRI and SpeedFam-IPEC (Nasdaq: SFAM), which warned last Thursday, blamed company-specific issues for their shortfalls. The companies say demand remains very healthy.

Speaking of semiconductors, some folks have wondered why DRAM prices haven't risen much lately even though some researchers have been expecting a shortage for the rest of the year. But during a conference call yesterday with clients, PaineWebber analyst Don Young noted the major PC makers stockpiled DRAMs earlier in anticipation of tight supply in the second half.

Qualcomm (Nasdaq: QCOM) stock is rising on yet another wave of optimism about CDMA in China, but at this point, I wonder if the stock hasn't reached the point where it's almost completely a plaything of fund managers who like to take stocks up and down for nice, steady profits. 22GO>