Home > Barbeque, General, Markets > Hewlett Packard: its calculators & its stock

Hewlett Packard: its calculators & its stock

August 7, 2010

Rocky purchased his HP12C Financial Calculator 25-years-ago,  and the calculator has been a loyal, trusted and always-present companion ever since.  It witnessed and assisted in life’s most important moments: 

  • It  computed the per-carat cost of Trophy Wife’s engagement ring; and the closing costs of The Humbert Family Estate. 
  • It calculated the required vitamin pills during pregnancy, and the travel and parking time to reach the local hospital.
  • It provided a “Discounted Present Value” for a lifetime supply of Rogaine.  ($11,000);  the cooking time for a gargantuan slab of discount bbq meat (3 days); and the hours required on a treadmill after eating the slab of meat (3 days).
  • It inspired The Second Law of Rocky.
  • It deserves credit for  every successful (and unsuccessful) arbitrage that Rocky executed over the past 25 years.

Desite dents, scratches and worn feet, HP12C never let Rocky down.  Yet suddenly,  two days ago, age caught up to HP12C. The display dimmed,  and commas/periods randomly appeared and disappeared. 

Even though Trophy Wife hates Reverse Polish Notation “RPN,”  she recognized the dangers of an unreliable financial calcuator, and located the tiny replacement batteries in a nearby town. Alas, new batteries did not fix the problem: HP12C was approaching the inevitable end of its life…. (Sentimental readers: the YouTube Video of the Byrd’s song “Turn Turn”  is here: http://www.youtube.com/watch?v=bgq8_EmOSM0 )

But in calculators, as in life, there is always a silver lining!  As HP12C faded, Rocky studied the financials and prospects of HP Corporation (HPQ), and concluded that it could be an interesting investment… if entered at the right price. 

Amazingly, this opportunity occurred just one-day-later  … as the CEO resigned amidst a sexual harrassment/expense account scandal.  Rocky started buying HP stock around 6pm ($42), because the stock lost $11 Billion (11%) in value on the news. He will buy more if it keeps declining solely because of this resignation news.  (The stock is trading at 9x earnings, so that means Mr. Market attributes $1.22 Billion in EARNINGS and $19 Billion in SALES to the just-departed CEO.  Rocky thinks Mr. Hurd was a fine CEO, but he is neither Steve Jobs nor Warren Buffett, and the reaction presents a Rocky I opportunity.)

[Disclosure: Rocky doesn’t believe that the disclosure of his future purchase of a HP calculator constitutes material inside information that will impact HP’s stock price.  He appreciates that the CEO’s expense account irregularities could be just the tip-of-an-iceberg of  problems. And he never provides investment advice. ]

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  1. August 7, 2010 at 11:06 am

    Sadly the iPhone/iPad emulator hasn’t gotten great reviews: http://itunes.apple.com/us/app/hp-12c-platinum-financial/id328224790?mt=8

    And hey, you’ll be purchasing some great executive vice presidents, though they cost a bit more than they did a few years ago: http://www.thestreet.com/story/10830261/1/hurds-excesses-have-been-in-plain-sight.html?cm_ven=GOOGLEFI

    • August 7, 2010 at 11:13 am

      Dave: Rocky is strictly a Blackberry user — the keyboard on the Iphone requires a too-high-level of manual dexterity. However, Rocky bought an iPad last weekend — and will post about his experiences shortly. As a teaser: the iPad’s bedroom illumination is interfering with Trophy Wife’s sleep….

  2. August 7, 2010 at 2:40 pm

    Rocky the iPad is very dangerous. Right now Mucky Muck Wife is using mine to shop online. Everything looks so pretty on the iPad that she just can’t help herself!

  3. August 7, 2010 at 3:47 pm

    Currencies can go to zero, or so near as to not make any difference. Zimbabwe, for example.

    • August 7, 2010 at 5:07 pm

      Mr. Pergiel — welcome back to Rocky’s blog. It’s a pleasure to hear from you again.

      Your observation regarding the debasement of currencies is true. But it’s also a fact that while the Zimbabwe currency became worthless, the Zimbabwe Stock Market did extremely well. See:

      http://ftalphaville.ft.com/blog/2008/06/23/13987/the-mad-market-of-zim/

      That said, if Hewlett-Packard goes to zero, it will NOT be related to Mr. Hurd’s resignation. It will also be sufficiently far in the future so that Rocky can (hopefully) exit profitably from his HPQ stock purchases on Friday and in the days ahead.

  4. August 7, 2010 at 7:37 pm

    Thank you, it’s good to be back (to quote the typical talk show guest).

    The FT graph does not compute. Over a year ago I found a receipt for one (1) dinner for over one billion Zimbabwean dollars. (http://pergelator.blogspot.com/2009/02/dinner-in-zimbabwe.html). The FT chart apparently shows everything was fine until two months ago. I thought the currency was effectively worthless a year ago. I am surprised anyone is still using it to measure anything.

    I just looked up Zimbabwe on Google news and was surpised (that’s twice in two minutes) to find that Mugabe is still “in power”. What he could possibly be in charge of baffles me. His own personal fortune, maybe? It must be substantial. I suppose you can feed an army for a few months on $30 million dollars.

  5. August 7, 2010 at 8:22 pm

    Oops. Never mind my comment about the FT chart. I thought it was current. It does say June 23 10 at the top. Only later did I realize it was 10:44, not 2010.

  6. masteroftheuniverse
    August 8, 2010 at 9:15 am

    Rocky, my HP-35 programmable scientific calculator that I bought in 1975 is still going strong. I always preferred RPN myself. A couple of years ago, I bought my son a Texas Instruments graphing calculator. It is sitting in his room, in the box, hardly used. I need to take it out of the box and give it a test drive.

  7. August 14, 2010 at 4:02 pm

    Off topic, but I figure you might know something like this, or at least know where to find out.

    I am trying to figure out how much money is held in Charitable Trusts in the US. I have been looking on the web and I haven’t been able to find anything. Do you have any idea?

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