The market is assuming that Hewlett-Packard Co. (NYSE:HPQ) will grow 6% next year, from its current annual revenue of $92 million. This is the company's forecast, and CEO Mark Hurd has earned enough respect with Wall Street so that the forecast is widely accepted
A good portion of HP's growth targets are built around marketing cost-efficient data centers and consumer electronics devices.
HP's expertise in creating data centers that are efficient and save large companies money is likely to become a large business for the big tech firm. HP has the ability and sales force, and the favorable economics are compelling.
But, consumer electronics sales bring the company into an ultra-competitive, even cut-throat part of the economy. The short-term growth potential of HP televisions and iPaq handheld wireless devices is far from certain. Moving into the realm of Apple Computer Inc. (NASDAQ:AAPL), Sony Corp. (NYSE:SNE), and Microsoft Corp. (NASDAQ:MSFT) has damaged a number of companies. Firms like SanDisk Corp. (NASDAQ:SNDK) and Creative Technology Ltd. (NASDAQ:CREAF) can attest to that.
If HP's 2007 number has a significant consumer electronics component to it, 6% growth may be too much.
Douglas A McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
12-27-2006 @ 11:46AM
Brian McAlindin said...
"Firms like SNDK...can attest to that"
Huh? SNDK is a major headache for APPL and taking MP3 market share hand over fist because they have end to end control over pricing whereas APPL does not, and happen to make a better product. I bought 3 SNDK Sansa e280r mp3 players for the kids for Christmas - 8gig and FM tuner for less than an iPod with 2 free months of Real Networks music downloads. Lacks the APPL "cool" factor, but I think it's cooler to get value and $$$ left in your pocket. I get your point but a poor/uninformed example.
12-28-2006 @ 9:29AM
Jim Beske said...
I agree partially on your take for the SNDK players. I have an e260 and use it all the time. They are great for listening to ebooks. I'm still not totally sold yet, I really want to start seeing their appliance type devices hit the market. I know they licensed about 5 companies to bring them into fruitition in the next few months, just wish they had made it by christmas. I would love to have a nightstand clock-radio that my e260 can plug into.