Hewlett-Packard Company (HPQ) Slumping Today Despite IP Sale

Hewlett-Packard Company (HPQ) Slumping Today Despite IP Sale
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Hewlett-Packard Company (NYSE:HPQ) is down almost 3% today at $28.57 as of 2 PM ET, despite the news they are selling a high-tech patent portfolio to QUALCOMM, Inc. (NASDAQ:QCOM) for an undisclosed amount. It is, however a down day for the markets. The major stock markets are all off close to 1.5% for the day, with the Dow Jones Industrial Average (INDEXDJX:.DJI) down over 220 points as of 2:10 PM ET.

Details of Hewlett-Packard patent portfolio

The IP portfolio Hewlett-Packard Company (NYSE:HPQ) sold to QUALCOMM includes 1,400 U.S. patents and pending patent applications and around 1,000 international patents and pending patent applications. Most of these patents relate to basic mobile operating system techniques, as well as a number of patents that Hewlett-Packard inherited when it bought Palm Inc. and Bitfone. Analysts are uncertain how many of thee patents have paying licensees or how much total licensing income Hewlett-Packard had been receiving from the portfolio.

The Street rates Hewlett-Packard as a C+

Equities research firm TheStreet rates HP as a C+ or Hold. TheStreet argues Hewlett-Packard Company (NYSE:HPQ)’s strengths include its excellent stock price performance, impressive earnings run, continuing growth in core sectors and stellar growth in net income. However, TheStreet also points to cutthroat competition in the industry, weak and falling profit margins in several key verticals and weak operating cash flow as major obstacles to be overcome by HP management.

TheStreet’s analysis concludes with a lukewarm Hold recommendation. “Powered by its strong earnings growth of 120.91% and other important driving factors, this stock has surged by 71.76% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock’s future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.”

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QUALCOMM, Inc. (NASDAQ:QCOM) is also trading down today, off almost 2% at $74.45 as of 2:05 PM ET.

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