Re: "HP breakup on the way" - Merrill Lynch

From: JFmezei (jfmezei.spamnot_at_istop.com)
Date: 09/18/03 

Date: Thu, 18 Sep 2003 12:21:37 -0400

Andrew Harrison SUNUK Consultancy wrote:
> At the same time it is a fact that HP's margins have fallen and
> the divison is making a loss (again). So the move to more laptops
> less desktops hasn't resulted in increased profitability has it
> in fact its the other way around.

That is easy to say. However, the increased weight of notebooks in revenus may
have helped to offset an ever greater loss in the conventional box PC where
margins are very negative.

I have a problem with companies who have product lines that are money losing
and no clear, decisive plan to fix whatever problem that makes that product
line unprofitable. If, as some have ponted out, the merger is fully consumed
and done with, then what is the excuse for the wintel crap business still
losing money ?

Does Carly just wait for Mickey Dell to have a heart attack and Dell to shut
down, allowing HP to raise prices and have the wintel division become
profitable ? Sorry to rain on Carly's parade, but as long as Dell exists, I
can see a consistent pressure on margins.

Where I see a difference however between Dell and HP is worldwide reach. When
the .com bubble burst, Mickey didn't hesitate to start to shutdown/downsize
foreign operations and focus on the US market. His JIT business model is less
suited to a worldwide operation simply because it doesn't make sense to build
a PC in texas and use FED Ex to ship it to a customer in Singapore.

So HP's distribution paradigm, while an old relic of the past, is perhaps
still better suited to a worldwide operation.

Perhaps what HP should have done with Compaq is turn Compaq into a USA only
operation with the same paradigm as Dell, while HP would have kept the old
paradigm and worldwide presence.

Atr one point, centronics was the de-facto standard for dot matrix printers.
Then, it was EPSON that took the seat, and then HP. But at the time HP
unseated EPSON as the de-facto standard printer company, did HP have such a
large PC presence in the market ?

One can argue that the wintel business is a loss leader to attract sales in
printer and cameras. But if HP, EPSON and Centronics were able to make their
printing business a de-facto standard without a big wintel business, one can
question the real need to have a wintel presence for peripherals.

Relevant Pages

  • Re: "HP breakup on the way" - Merrill Lynch
    ... > I have a problem with companies who have product lines that are money ... to support the Enterprise business. ... > Does Carly just wait for Mickey Dell to have a heart attack and Dell ... allowing HP to raise prices and have the wintel ...
    (comp.os.vms)
  • Re: OT Wall street occupation.
    ... For example Dell asked a Chinese company to begin making ... The Chinese company did this and increased Dells profit on ... If the U.S. was as business friendly as China, all sorts of factories would be opening in The States. ...
    (alt.home.repair)
  • Re: What does HP do ?
    ... On Wed, 16 Mar 2005 22:09:00 GMT, Keith Parris ... Dell doesn't have a mail order business model anymore, ... >> when HP bought Compaq), you in fact make it worse because you are now so ... compete with Dell on Wintel boxes. ...
    (comp.os.vms)
  • Re: Replacement for Dell 8110?
    ... JayB is very observant..... ... my existing Dell desktop that I wish to replace is a B110. ... like a package that includes a monitor. ... being a business machine they do not come with very large hard disks. ...
    (alt.sys.pc-clone.dell)
  • Re: The tax industry....Spin and the new economics
    ... some have sold to secure that loss. ... There are some people who have lost their jobs, ... There are business that close their doors, ... And the sun rises in the morning. ...
    (misc.taxes)