http://www.cnbc.com/id/48753689
If you read this particular article by CNBC you would have thought that they are heading in the right direction. And you would be right. They are moving away from the shrinking red-ocean battle for personal computers and personal laptops and moving into the more profitable segment such as servers, networking and storage. Thus if your analysis is based on current situation, yes you would be right.
But stock picking is based on future earnings, ie: you are buying today X stock for USD1 that in the next few years will increase to USD10; giving you that sweet taste of profit.
So if you look at HP's strategy of moving into servers, the biggest company that pops into my head is really Big Blue aka IBM. So you think they will sit by and let HP come in and dominate? Likely no. They will fight back tooth and nail to maintain or even grow their market share. and when there is a fight between two dogs, my bet would be on the bigger dog.
Their customers such as Facebook and Google are building their own data centres and thus reducing the need for HP's services. ( It could lead to an increase in sales for Dell though as they are no focused on selling to Enterprise). So their customer pool is shrinking.
All in all, potential customer is shrinking, a competitor hell bent on defending its territory, weak external demand, a sinking ship all leads to my one conclusion. HP better get his act right, and soon!
My best bet, for the PC makers, it would be a bloodbath and only companies such as Lenovo could make money due to their low ( lower than most cost) and not HP or Dell who currently is moving like a rudderless ship.
If you read this particular article by CNBC you would have thought that they are heading in the right direction. And you would be right. They are moving away from the shrinking red-ocean battle for personal computers and personal laptops and moving into the more profitable segment such as servers, networking and storage. Thus if your analysis is based on current situation, yes you would be right.
But stock picking is based on future earnings, ie: you are buying today X stock for USD1 that in the next few years will increase to USD10; giving you that sweet taste of profit.
So if you look at HP's strategy of moving into servers, the biggest company that pops into my head is really Big Blue aka IBM. So you think they will sit by and let HP come in and dominate? Likely no. They will fight back tooth and nail to maintain or even grow their market share. and when there is a fight between two dogs, my bet would be on the bigger dog.
Their customers such as Facebook and Google are building their own data centres and thus reducing the need for HP's services. ( It could lead to an increase in sales for Dell though as they are no focused on selling to Enterprise). So their customer pool is shrinking.
All in all, potential customer is shrinking, a competitor hell bent on defending its territory, weak external demand, a sinking ship all leads to my one conclusion. HP better get his act right, and soon!
My best bet, for the PC makers, it would be a bloodbath and only companies such as Lenovo could make money due to their low ( lower than most cost) and not HP or Dell who currently is moving like a rudderless ship.
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