Market Overview

HP, Fusion-io Benefit from Dell Going Private Rumor

Dell (NASDAQ: DELL) was the big mover on Monday, closing up 12.96 percent after Bloomberg reported that the company was in talks to go private. Yet, Dell wasn't the only stock that benefitted from the rumor; shares of Fusion-io (NYSE: FIO) and Hewlett-Packard (NYSE: HPQ) also saw a spike in line with Dell.

HP had been up on the session already, but traded higher around 2pm ET when the rumor about Dell hit the market.

As HP competes largely in the same market -- the production of PCs running Microsoft's (NASDAQ: MSFT) Windows operating system -- a more valuable Dell would suggest a more valuable HP.

In fact, the link between the two companies might be a motivating factor behind Dell's attempts to go private, if that's really the case. Both Dell and HP shares were ravaged in 2012, plummeting as PC sales declined.

However, the move may have been exaggerated by HP's accounting struggles -- an issue Dell doesn't have. If Dell's management believes shares are undervalued, going private could be an attractive option.

Meanwhile, Fusion-io has long been rumored as a takeover target, with Dell frequently cited as a potential acquirer. With its PC business in decline, many believe that the long term hope for Dell is to become another IBM (NYSE: IBM), focusing on the enterprise segment of the market. Adding Fusion-io's technology might help that transition.

Shares of HP closed up 4.89 percent on Monday; Fusion-io closed up 4.37 percent.

Posted-In: News Rumors M&A Intraday Update Movers Trading Ideas Best of Benzinga

 

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