HP: No longer a safe haven stock, but is it up for sale?

The company’s shares fell 20 percent on Friday after a rash of announcements including a costly $11.7 billion acquisition, the killing of its tablet computer and a drawn-out review of its PC business that could lead to a spin-off. “Their numbers are deteriorating and they’re trying to transform in the middle of a really bad economy.” Analysts also questioned why HP was giving up so soon on the mobile business it bought for $1.2 billion from Palm Inc-even as they doubted HP would ever defeat Apple Inc, whose iPad and iPhone crushed Palm’s sales. “Last night HP may have eroded what remained of Wall Street’s confidence in the company and its strategy,” Needham & Co said in a research note. “It was a lot of cost and a fairly large distraction over the last 9 months.” Some analysts suggested that another company might buy the WebOS business or Palm patents but even if this Noland said he did not expect HP to make its investment back. Gleacher & Co analyst Brian Marshall cut his price target for HP to $39 from $50 saying he “materially underestimated the magnitude and timing of this metamorphosis.” He said, however, that HP “is undergoing a sound strategy transformation by focusing on high-growth, high-margin opportunities in the enterprise/commercial markets.” With a forward 12-month price-to-earnings ratio of 5.6, the company is trailing its peers, including Dell, Apple and IBM, according to Starmine SmartEstimate.