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Hewlett-Packard Company Message Board

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  • DowDanny DowDanny Jul 8, 1998 7:12 PM Flag

    Motorola Vs. HP

    Everybody is stating the obvious "Dell is no
    H-P", especially the "we're bigger and smarter"
    cheerleaders.

    But the post on margins and percentages tells exactly
    why HWP should seriously consider whether it wants to
    be in Dell's (and CPQ, etc...)
    business.

    Margin on Laser Printers: 39%,
    Margin on Supplies :
    33%
    Margin on T&M : 49%
    Margin on WS : 46%
    All
    expanding businesses. Each in a market where each dollar
    invested earns more than the
    last.

    Compare:
    Margin on PCs: 19%

    {Which ain't bad, except tha t
    net margins were negative. And margins were anyways a
    bit less than Dell, at least today}.
    Each dollar
    invested here returns less than a dollar invested in the
    above business segments. Does the chance to present an
    "all-in-one bundle" really justify the need to be in the PC
    box business ?

    I think the big wild card is
    the upcoming Merced. If it gives H-P a big headstart
    on the high-end users, PCs may turn out to be a
    major boost. But for past 18-24 months, despite
    galloping revenues, being a box-maker has been drag on HWP.
    It causes the stock to be evaluated relative to the
    Dell's and Compaq's, it leads to lower margins and
    ROI,ROE and vastly increases chance of "disappointing"
    Wall-Street. even marky59 should read his post of quarterly
    EPS... are they increasing faster or slower since
    expanding PC segment ?

    The best thing I can say
    about H-P PC business, is that the rest of H-P makes it
    possible for Hewlett to withstand losing money in such a
    sucky business. Please inform me of a real reason that
    it continues to be a good idea to expand in this
    sector ...

 
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