So, keep riding the circle, Mepci <ggg>. As for HPQ, some interesting comments from Andy Neff...
Best regards,
John
:30 ET PC Price War: : In Bear Stearns' Ripple Effect, analyst Andy Neff suggested there is an increasing probability of a price war in the spring/summer in the PC market. The factors he cited for that probability include seasonally soft demand, increasing component availability of DRAM and Pentium 4s, high consumer inventory at Hewlett-Packard (HPQ), and recent commentary from HPQ that suggests the company's focus is shifting from profitability to market share. He went on to say that a looming price war plays to Dell Computer's (DELL) strength, but conceded it presents short-term margin risk. At the same time, he thinks a price war would offer more challenges to Gateway (GTW) which, we would add, is making a concerted effort these days to improve its market share by being the value leader across all products and price points. As for HPQ, Neff says PCs are not critical to its results, but nevertheless, it won't want to lose share. Apple (AAPL), meanwhile, is on the fringe in Neff's estimation but he thinks it would benefit on the margin side of things from the drop in DRAM prices. Obviously, then, a price war carries different implications for these different companies, but there is no mistaking the fact that a price war means good things for the consumer. Frankly, it can be argued that the PC makers are their own worst enemy as their never-ending bid to grab market share has conditioned consumers to scoff at initial price points. Consequently, that inhibits inventory reduction which, in turn, necessitates the markdowns. The lack of a so-called "killer application" is another factor that has made it more difficult to move product as it has kept consumers and businesses from upgrading their existing boxes. In time, that upgrade cycle will come, but until profitability takes precedence over market share gains, investors and consumers alike can expect the PC makers to remain at war on the pricing front.-- Patrick J. O'Hare, Briefing.com |
