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

From: John Smith (a_at_nonymous.com)
Date: 09/18/03 

Date: Thu, 18 Sep 2003 20:44:21 GMT

JFmezei wrote:
>
> 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 ?

Same excuse that DEC had when it couldn't make money on PC's....it's there
to support the Enterprise business.

>
> 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.

Sure... but HP will continue to absorb higher costs in its
supply/inventory/distribution chain as a result. With Dell eating HP's lunch
in the only market (so far) that has the potential to make HP a pantload of
money in PC's, HP eaks out what it can in EMEA and South American/Asian
markets.

> 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.

What are you ... some smart young whippersnapper doing a Walter Hewlett
impersonation? :-) :-)

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