WSJ.com - Copy Machine: H-P, Post-Compaq, Looks Like Its Old Self

WSJ.com - Copy Machine: H-P, Post-Compaq, Looks Like Its Old Self "Hewlett-Packard Co.'s acquisition of Compaq Computer Corp. was designed to significantly remake H-P. But on the second anniversary of the biggest-ever technology merger deal, the new H-P isn't looking all that different from the old one -- and that isn't necessarily good for investors.
Prior to the $19 billion deal's May 2002 close, Hewlett-Packard was a diversified technology concern with mediocre computing businesses and a red-hot printer unit that generated the bulk of its profit and revenue. Today, that profile hasn't substantially changed. Even as H-P's computing businesses continue to struggle for sustained growth, its printing unit remains its greatest strength, contributing about 30% of quarterly revenue and 70% of quarterly profit.
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The upshot: H-P still faces many of the same questions over growth and what value it brings beyond its printing business as it did two years ago. In 4 p.m. trading yesterday on New York Stock Exchange, H-P's stock fell 22 cents, or 1.1%, to $19.78, just slightly ahead of its closing price of $18.22 on May 6, 2002, when the combined company was launched.
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Indeed, H-P's printer business alone is valued at $21 a share, says Kevin McCloskey, a portfolio manager at Federated Investors, which owned 9.6 million H-P shares at the start of the year. That means the market is assigning hardly any value to the company's other businesses. "Not a lot has changed within certain parts of the company," Mr. McCloskey says."