HP needs some magic

HP definitely needs some black magic to make its current troubles go away.

This may not help on the snooping front, but HP's just announced acquisition of niche game PC maker Voodoo PC is a good move, atleast over the short term.

Voodoo PC founder and CTO, Rahul Sood, has been blogging for a while. The blog is among the more informative and readable tech/PC-business blogs out there.

HP's buyout seems to be in response to Dell's recent acquisition of Alienware, another high-end game PC maker.

Why did I say "over the short term" above ? In the longer run, I expect HP, like IBM, to exit the PC business. The costs/margins will deteriorate further, and for a company like HP it just doesn't make sense to be there. I would say the same thing about the printer business, which, for now, enjoys higher returns than the PC business.

Are HP shares a buy now ? I will not be buying at their current price, but I am holding onto my shares bought during the bear-market lows. They have more than doubled since then, and the dividends also have been hiked. The contrarian in me recommends DELL instead, especially now that most experts/observers have turned very negative on it. I did open a small position recently, and I intend to add to my position substantially, as part of my long-term buy and hold positions.

HP's acquisition of Mercury Interactive, about which I posted here, was more in line with the long-term focus on software/service.