Buy Netflix, Inc. (NFLX) if You’re Too Scared of PCs

Hewlett-Packard, in its most recent quarter, reported a 0.3% decline in year-over-year revenues (Non-Generally Accepted Accounting Principles), with cash flows from operations growing by 44% year-over-year. The company has been able to improve the amount of cash flow generated from its operations through cost-cutting practices. The cost-cutting resulted in a modest decline in revenues, but going forward it is highly likely that the revenue growth will stabilize. This is because the IDC estimates that computer shipments will stabilize and grow at around 1.9% worldwide from 2014 onwards.

The computer isn’t dead. The reason for this is that tablet and smart phone devices, while extremely cool, are not very work station friendly. Smartphones and tablets were designed to consume content but not necessarily to create content. You will never see a graphics designer hard at work in front of a tablet designing the next scene of a movie. I can also guarantee an architect will not drop a CAD (computer aided design) program into a tablet and get to work. Therefore it is highly likely that the computer will be here to stay. It is just a matter of time when there will be a floor underneath the market, but for now no one knows when that will happen.

Conclusion

For those that are patient enough, computers will most likely turn around. But if you can’t wait around for the coals to get warm in the desktop computer space, consider Netflix, Inc. (NASDAQ:NFLX) instead.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Netflix, Inc. (NASDAQ:NFLX). The Motley Fool owns shares of Netflix.

The article Buy Netflix if You’re too Scared of PCs originally appeared on Fool.com.

Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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