Neil Sedaka Never Met Hewlett-Packard Company (HPQ)

This would work because there are much less expenses in the solutions and services side of HP’s business. By minimizing their expenses and providing great solutions, HP would return to profitability and once again be a company that can begin their path to growing earnings in the right direction. It would be like pressing a restart button with an entirely new vision for the corporation.

This may seem as a harsh breakdown of the company, but I consider this to be a company not worth an investment. I would, however, be an investor of their solutions and service side because regardless of their inability to make money on products, they are incredibly efficient at making the products work.

This proposed breakup plan of HP is very similar to what SAIC, Inc. (NYSE:SAI) is planning on doing in the near future. They are separating their solutions side, which provides science and technological services to the national security, engineering, and health industries, from their services side, which provides systems engineering, financial analysis, and programming support. They, like HP, have been having trouble keeping shareholders happy. This split is expected to propel each individual company higher, but I see them selling off the services side to focus on government contracting since it is becoming a battleground of a sector. On top of this, SAIC had some troubles with fraud in which they owed the state of New York $500 million. The split should also result in a name change for each newly formed company. The name change would help people forget about the damage caused by SAIC and allow them to move past it. HP could use this outline to split up, sell off units they are not doing well in, and change their name to give themselves a brand new image. This can save Hewlett-Packard. Until then, I’m initiating an underperform call for HP on CAPS.

The article Neil Sedaka Never Met HP originally appeared on Fool.com and is written by Joseph Solitro.

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