Shares of computer maker Dell Inc. climbed Friday after Hewlett-Packard Co. said it was looking for a way to exit the PC business.
THE SPARK: Late Thursday, HP said it would look at spinning off or selling its PC business, the world's largest, in 12 to 18 months. PC sales are declining in the U.S. in the face of competition from tablet computers, especially Apple Inc.'s iPad.
THE ANALYSIS: Needham & Co. analyst Richard Kugele said he expects Dell to capitalize on the likely "market disruption" caused by HP's decision. He upgraded the company from "Hold" to "Buy" in a Friday morning note.
Judging by what happened when Compaq sold itself to HP and when IBM sold its PC business to Lenovo, Kugele expects HP customers, particularly corporate clients, to "leak" over to Dell.
Kugele doesn't believe HP's move signals that the PC is dead, but that it's looking for greater returns by investing in hardware, software and services intended for businesses, government and other enterprise customers.
The Needham analyst put a 12-month price target of $17 on Dell shares.
SHARE ACTION: The shares rose 36 cents, or 2.6 percent, to $14.12 in afternoon trading.