How else do you explain the company's bulldoggish commitment to buying back its own shares? This year, HP spent $10.9 billion on share repurchases in the open market, with $2 billion of that happening in the fourth quarter. That left only $2.7 billion of the old repurchase plan -- so the board tacked on another buyback authorization of $8 billion.
All of this activity in the open market was financed by incoming cash flows and a strong balance sheet. That's a more conservative approach than IBM
The backdrop to this act is slowing economic growth that makes Home Depot
HP is running like a well-oiled machine, and margins and sales keep growing at healthy clips. The company has beaten Wall Street estimates every single quarter since Mark Hurd took over the CEO post, which wasn't always the case under Carly Fiorina. The GAAP income margin is up to 7% now, which takes us back to the early days of Fiorina and before the Internet bubble imploded, when HP had a 7.6% net margin way back in 2000.
The gains are backed by solid performance. So, despite a 140% share price boost since Hurd first helmed HP and a 20% gain year-to-date, I can understand if the company still feels like an unreasonably cheap date.