HP Shifts Focus to China - Analyst Blog
30 6월 2011 - 11:40PM
Zacks
The largest PC maker Hewlett-Packard Company
(HPQ) recently announced its expansion plans for China. The tech
major announced a series of new initiatives which may be expected
to strengthen its presence in China. Moreover, the investment is
expected to deliver a seamless and secure solution for the
connected world.
The company is planning to make investments in cloud computing,
systems research and development, technology infrastructure
transformation projects and social media platforms, which will
ultimately strengthen its presence in China’s largest cities and
accelerate its growth in the Chinese market. The growth plan is
inline with China’s industrial priorities and is befitting with
HP’s strategic growth plans for the region.
In China, the company’s main focus would be in cloud computing
and social media. The company didn’t provide much detail about the
size of the investment, but the Chief Executive Officer Leo
Apotheker, is bullish on the region. The CEO is also of the opinion
that China’s vibrant economy, with high growth rate in social and
mobile connectivity, and strong commitment to innovation, which
presents tremendous opportunities for HP.
HP will cash in on China’s Internet population (the largest in
the world today), and that fact that its need for rapid
infrastructure growth requires flexible, fast and seamless
technology to support bandwidth-hungry applications. This has
resulted in increasing the need for mobility, security and
manageability of the network. Moreover, the acquisition of 3Com
which is already paying rich dividends to the company.
The company has a business plan in place wherein, it has opened
its first HP Cloud Executive Briefing Center in Tianjin to provide
customers in China and the region with hands-on experience in
operating HP-led cloud environments.
Moreover, HP will also tap the strong engineering talent in
Beijing, expand its presence and investments in Shanghai with
additional manufacturing facilities, and will also move ahead
keeping pace with China’s 12th five-year plan, enhancing its
presence across major cities, including Shanghai, Tianjin and
Chongqing, to tackle complex infrastructure, energy and healthcare
issues. We believe this strategic growth plan will have a positive
impact on the Asian business of the company.
The company’s growth story remains intact given its track record
of acquisitions, new deal wins and deeper penetration in existing
markets. HP recently signed a deal to acquire Printelligent, a
closely held provider of managed print services (MPS) for an
undisclosed sum.
This acquisition is a part of the company’s strategy to optimize
the traditional technology environment that its customers depend on
and deliver a connected world between the customer and the
enterprise.
It seems that the company is undergoing significant structural
changes given its longer lead time and services selling, as well as
the lengthy revenue recognition cycle. We are expecting a change in
the process during fiscal 2012.
Hewlett-Packard reigns supreme in the computing world with its
strong business model and leadership position in both PC and Server
segments. The company is also well positioned to challenge Cisco
Systems Inc. in the networking space and gain significant market
share. Given its strong market position, HP should benefit
substantially from the revival in the U.S., as well as growing
Asian demand.
Despite the company’s market position and compelling product
line, we remain cautious about future growth, especially as
competition from other big technology players, such as
Cisco Systems (CSCO), Apple
(AAPL), Acer, Microsoft Corp
(MSFT), and Dell Inc. (DELL) heats up. The
increasing competition may be expected to impact pricing in the
market, moderating profitability to some extent.
Currently, Hewlett Packard has a Zacks #3 Rank, implying a
short-term Hold rating.
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