Should You Buy What Hewlett-Packard Company (HPQ)’s Selling?

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What yesterday’s earnings call told us is that HP is still a long way from making the transition away from PCs to new business lines. Decent results in its enterprise group and enterprise services units — both were flat compared to fiscal Q1, though down significantly from last year — is fine, but doesn’t seem worthy of a double-digit spike in HP’s share price. Whitman is focused on shifting HP to the enterprise market, in contrast to Dell Inc. (NASDAQ:DELL), who is slashing prices in an effort to salvage a dying PC business.

Leaving no doubt of Hewlett-Packard Company (NYSE:HPQ)’s decision to not enter a PC pricing war with Dell, Whitman said, “You saw one of our competitors, Dell, completely crater their earnings. Maybe that’s what you do when you go private. We’re here to set this company up for the long term, not just get through this year.”

Like HP, Microsoft Corporation (NASDAQ:MSFT)’s share price is on a nice run of late, up over 28% for the year — 23% in the last three months alone. The difference, and the same applies to International Business Machines Corp. (NYSE:IBM), is that Microsoft’s further along in expanding revenue lines, including both cloud and mobile computing. Recent data from IDC puts Microsoft’s Windows Phone OS in the No. 3 spot, overtaking BlackBerry‘s OS. And with its Surface tablet and new cloud-based Office 365, Microsoft is quickly moving beyond its reliance on PC operating systems to drive revenue growth. About all you can say for HP right now is at least it’s beating its own expectations.

Whitman’s the right leader, and baby steps are being made, but it will likely be a year or two before HP really hits its stride. Fine for some long-term investors, but with Microsoft and IBM already making inroads in their respective business transitions, why wait?

The article Should You Buy What HP’s Selling? originally appeared on Fool.com and is written by Tim Brugger.

Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines (NYSE:IBM) and Microsoft.

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