HP MAY SPLIT -- BUY DELL

HP is making close to zero dollars on its computer business; including the entire Compac line. HP makes 76% of its profit from printers (including those nasty cartridges). HP is trying to follow the IBM model by offering consulting services to business. In the mean-time, Apple is making a lot of noise with the analyst because some of the i-pod buyers are coming back to get an Apple computer.

So far, only Dell has figured out how to sell computers at a profit. In the past year, Dell has show that the model works for printers too. In no time, Dell has picked up a 13% market share in ink jet printers. The most recent Dell catalogue offers the new Pocket DJ which is a digital music player that costs less and plays longer than the Apple i-pod.

Apple has had a heck of a run and Steve Jobs is a genius. I would not sell Apple short. The printer side of HP is worth the price of the shares. The computer business as a stand alone business is worth another 35%. In other words, APPLE is over valued because of excitement, HP is depressed in price because it is getting its fanny whipped and Dell is doing what it does best--making money.

Momentum players may jump on APPLE and make some quick bucks. HP buyers could get lucky to see the company split up. Dell buyers can sit back with confidence that their value will grow.