Toner News Mobile › Forums › Latest Industry News › *NEWS*HP COULD BENEFIT FROM DELL
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AnonymousInactiveHP could benefit from drop in Dell printer
sales
sAN FRANCISCO – A sharp drop in consumer printer sales at Dell Inc. in an
otherwise glowing quarterly report may offer an opening to rival Hewlett-Packard
Co. when it posts its own earnings results next week.
HP, the top maker of personal computer printers, is set to post slightly
higher quarterly results on Tuesday, despite sales weakness in Europe,
price-cutting in its core printer business, and expected job lay-offs, Wall
Street analysts say.
Despite the chink in its rapid printer growth, Dell’s otherwise solid results
for the quarter ended in April and optimistic near-term outlook fueled a 6
percent jump in Dell shares on Friday, lifting technology stocks broadly.
Dell’s confidence, echoing recent optimism from top chipmaker Intel Corp. and
network gear leader Cisco Systems Inc., reassured investors that no universal
slowdown is taking place — at least among companies gaining market share or
with hit new products.
In the enthusiasm, even HP shares gained by 2.5 percent.
Dell, the world’s largest personal computer maker, has been on the attack
against No. 2 ranked PC maker HP by going after HP’s highly profitable printer
business, and by extension, HP’s ability to invest in its barely profitable PC
business.
“Dell’s threat is real, but investors who have extrapolated to an inevitable
demise of the HP franchise should probably pause and take stock,” SG Cowen
analyst Richard Chu said in a note to clients.
Dell, whose gains often come at the expense of HP, said on Thursday that its
inkjet printer sales have fallen over the past three months, despite growing 60
percent from a year ago. Dell has enjoyed surging growth since entering the
printer market a year and a half ago.
But the overriding issue for HP remains whether newly hired CEO Mark Hurd
will seek to lower investor expectations for the company in the near-term.
Investors have adopted a wait-and-see attitude to HP stock awaiting word on
Hurd’s strategy.
“The keys remain whether new CEO Hurd — in his (debut) — will reset
financial expectations and/or give investors further confidence in his ability
to drive operational improvements at HP,” Bear Stearns analyst Andy Neff advised
investors in a research note.
HP shares are off just 1.5 percent so far this year, far less than most other
technology names. Until its sharp gain on Friday, Dell had fallen 13 percent on
the year. IBM, another major HP rival, is down 26 percent for the year.
A variety of Wall Street analysts continue to clamor for HP to split-up the
company in order to unlock shareholder value buried within the combined PC,
printer and enterprise computer company.
Neff summed up this feeling earlier this month: “As Mark Hurd takes the reins
of HP, we have some suggestions for an action plan: Be bold. Get (out of) PCs.
Rationalize the enterprise business… In short, don’t spin-off printers but
de-emphasize the rest.” -
AuthorMay 22, 2005 at 1:57 PM
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