Today we are watching…
1. HP (#hp)
Hewlett-Packard was once the crown jewel of an IT investors’ portfolio. Nowadays, we seldom use the term ‘IT’ and HP has been demoted from nobility to now sell home printers. It’s a spectacular fall from grace. However, one big-name investor still resides in this shell of a company that once was, and his name is Carl Icahn! As a shareholder in fellow IT laggard, Xerox, the man’s not shy about his support for a merger. He endorsed the $33.5 billion bid from last week from Xerox, which popped HP’s stock, but to no avail, it seems. The offer was declined with thanks yesterday, leaving long-suffering investors a little heartbroken.
2. Xerox (#xerox)
Xerox is another familiar name to market old-timers. Like HP, it once had a bright IT future laying before it. However, also like HP, it’s now shedding staff, cutting costs, and all-but waiting to die unless billionaire shareholder Carl Icahn can revive their merger. A trade on either company is a bet that Icahn can force through the deal. He “believes very strongly in the synergies, and thinks a combination is a no-brainer.” With the outlook so bleak at the moment, he’s pitching that a unified company would decline slower than most investors predict, and that could prove the catalyst for a jump in stock price. First thing’s first, however, Xerox needs to get down on one knee again and make HP a better marriage proposal.