A new report in Bloomberg suggests that Hewlett-Packard ( HPQ ), the globe's largest computer manufacturer, could be a takeover target at its current valuations. The firm recently announced that it will spin off its personal computer division, even though it dominates that market.
The news battered the company's share value, pushing it from $30 on Thursday, August 18 to under $25 per share. In Monday's trading, HP shares closed at $24.45.
"The value right now looks extremely attractive," Michael Mullaney, of Fiduciary Trust in Boston, told Bloomberg News. "For the right company, it probably would make sense for someone to come in and scoop it up. Someone could come and at least buy pieces of the firm."
So what does HP still have to offer the prospective buyer? Well, as journalist Ben Worthen of the Wall Street Journal told NPR, its PC hardware division accounts for $40 billion of revenue and 18.5 percent of the total global market with 64 million units sold. Worthen asserts that the company will now try to focus on enterprise applications and software, more lucrative businesses with lower production costs.
Bloomberg identifies the enterprise and server divisions as tempting targets for Oracle ( ORCL ), which dominates the market in enterprise software.
Another valuable asset of HP's might be its portfolio of technology patents. When Google ( GOOG ) snapped up Motorola Mobility for $12.5 billion, analysts agreed that it was largely motivated by a desire to control the tens of thousands of patents held by the cellphone company.
A number of major players have effectively decided that the PC market is now in permanent decline, set against the rise of mobile computing and lightweight tablets. No less a technological eminence than Mark Dean, one of the IBM ( IBM ) engineers tasked with creating the first PC, said that PCs are no longer on "the leading edge of computing" and will become as obsolete as vacuum tubes.
Of course, the rise of China as the world's biggest PC market could throw a lot of plans into disarray - much will depend on whether newly affluent Chinese consumers opt for tablets, smartphones or PCs.
Disclosure: The writer is long HPQ.