re: HP Layoffs Signal Punishing Fall
HP's stock is approaching a 1 price to book ratio, currently 1.076... which is crazy. If the book ratio goes below 1, that means it would technically be financially beneficially to liquidate the company. HP has some inflated assets, e.g. $7 billion in inventory and $26 billion in real estate which they likely could not sell for anything near that amount, so there will be no liquidation... and they would be liquidating a company that makes $7 billion a year in profit. The crazy part is that the stock has been beaten down to the point where it is conceivable. Wall Street and other investors really hate this strategy and management team. At this point the value of the tangible assets (office, inventory, AR, etc) is worth as nearly much as the company. It is financially advantageous to break up the company and sell off or spin off the component businesses. The parts under new management are worth more than the sum. HP had better come up with a coherent strategy that people think is viable or there is going to be pressure for a break up.