Steve Jobs Must Be Smiling

Aug 19, 2011
J. Webster
Comments Off on Steve Jobs Must Be Smiling

With the news that Hewlett Packard has conceded to Apple and decided to get out of the PC, tablet, and mobile phone markets, is Steve Jobs cackling as he strokes his cat and peers out at the world from his spaceship?

It would almost seem so. There must be some joy in the hearts of Jobs and Apples’ top brass to see all these other companies chasing them and struggling to keep up. Even good old Google, the search engine giant, who are trying to keep up with Apple and the iPhone by buying Motorola. A purchase that one Apple executive called a little expensive. And then there’s Research in Motion, whose stock has too fallen off a cliff in the last year, just like HPQ. What’s next in the computer/mobile space, will someone try to buy RIMM and try to keep up with Apple or will they all just concede?

PCs are HP’s biggest revenue generator, but the business is also HP’s least profitable, a result of falling prices for computers and brutal competition.

HP’s effort to jettison its PC business is another concession to Apple’s increasing dominance of consumer electronics, said Shaw Wu, an analyst with Sterne Agee. The PC division also had become a drag on HP’s stock even though it still accounts for about 15 percent of the company’s earnings, Wu said.

“Apple is such a fierce competitor that HP probably realized it was going to have to cut its losses,” Wu said. “And it makes sense to cut your losses sooner than later.”

Was one of the greatest trades in the past three years to go long Apple (AAPL) and short the rest of their competitors? I’m guessing one savvy investor had those trades on. It all seems so clear with hindsight. If only.

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