StockCall Review on Hewlett-Packard and International Business Machines: The Shift from PCs to Mobile

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31 Jan, 2013, 13:00 GMT

LONDON, January 31, 2013 /PRNewswire/ --

The shift to mobile computing in the last two years has hurt personal computer makers such as Hewlett-Packard Company (NYSE: HPQ) and Dell Inc. Both companies have been forced to rethink their strategy. As Hewlett-Packard and Dell look to transform their businesses, shares of both companies have taken a beating even as shares of other major technology companies such as International Business Machines Corp. (NYSE: IBM) have performed well in the last two years. StockCall analysts have completed a full technical research on Hewlett-Packard and International Business Machines. These free reports can be accessed upon registration at http://www.stockcall.com/register

Shift to Mobile

With more and more users shifting to mobile computing, demand for PCs and laptop has taken a hit. Weak global economic environment also had an impact on PC makers. The outlook for PC makers looks even more uncertain, with tablet sales expected to continue to rise. In such a scenario, PC makers such as Hewlett-Packard have been forced to rethink their strategy. Sign up today to download our free report on http://www.StockCall.com/HPQ013113.pdf  

Hewlett-Packard's Turnaround Strategy

Back in October last year, Hewlett-Packard, at an annual Securities Analyst Meeting, outlined its turnaround strategy. CEO Meg Whitman highlighted the progress made by the company since late 2011 to stabilize the business and lay foundation for a multi-year turnaround.

Whitman said that by 2016, she expects Hewlett-Packard's revenue to grow in-line with the GDP. HP's Printing and Personal Systems, which has been the worst affected by the shift to mobile, is making changes to better understand and anticipate customer needs and deliver better products and solutions that leverage the entire HP portfolio.

Hewlett-Packard also launched the HP ElitePad 900, a tablet designed specifically for businesses. The company is also re-investing in mobility with a dedicated leadership team. Although HP is making efforts to offset the weakness in the PC market with its turnaround strategy, it will take some time before the company can start growing again.

Q1 Results Eyed

Investors are waiting for Hewlett-Packard's first quarter results, which will be released next month, to check how the company has been progressing since implementing its turnaround strategy.  

In the fourth quarter of fiscal 2012, the company reported net revenue of $30 billion, down 7% on a year-over-year basis. Its Personal Systems revenue for the quarter fell 14%. Both Desktops and Netbooks units fell 12% in the quarter, thus highlighting the weakness in the PC market.

For the upcoming quarter, the Palo Alto, California-based company expects non-GAAP diluted earnings per share to be between $0.68 and $0.71.

IBM as an Example

As Hewlett-Packard continues to struggle due to the changing market dynamics, the company can look to International Business Machines Corp. [Free Report on IBM] [1] as an example. Over the years, IBM has successfully transformed itself into an information technology services company.

Last week, IBM reported strong fourth quarter results with net income of $5.8 billion, up 6%. On a yearly basis, profits were up 5% to $16.6 billion. Other key revenue data for the full year were an 80% surge in its cloud computing revenue and a 13% increase in its business analytics revenue. Ginni Rometty, Chairman, President and CEO of IBM, stated that the company's performance in the fourth quarter and for the full year was driven by its strategic growth initiatives---growth markets, analytics, cloud computing, Smarter Planet solutions---which support the company's continued shift to higher-value businesses.

Looking ahead, IBM plans to continue to invest in delivering innovations for the enterprise in critical areas such as big data, mobile solutions, social businesses and security.

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  1. International Business Machines Corp. Technical Analysis [ http://www.StockCall.com/InternationalBusinessMachinesCorp013113.pdf ]

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