On August 19, Hewlett-Packard announced that it will explore the spin-off or sale of its personal computer business, including the discontinuation of sales of smartphones and tablets based on the WebOS mobile operating system. After the news was announced, HP's stock price fell by 6% on that day. This is the second time in Hewlett-Packard's history that it has divested its core business because of "the situation is forcing." The previous time, in 1999, Hewlett-Packard merged its division of measurement equipment into Agilent.
HP’s personal computer business had a profit of US$567 million for the quarter ended July 31, but its revenue fell 3% year-over-year to US$9.6 billion. After the spin-off, HP will reduce its revenue by about one-third. But this is not the main trouble that Li Ai Ke is facing as HP's new CEO. The bigger question is how, after the spin-off, HP will be able to get a new life as the overall profit rate increases.
It is obviously not Li Ai Ke's intention to reshape his spin-off. On the day of the new global strategy for HP on March 14, this year, in response to media rumors about HP's spin-off of the PC business, he said, "This is a rumor that I can't stand." For Li Aike, the "moving place" of HP's CEO position lies in the size of HP, and the personal computer business is an integral part of HP's new strategy of "successfully winning." In the direction of the CEO's "Hewlett-Packard full business to the mobile Internet and cloud computing transformation" carefully constructed, HP will put its full line of products including servers, PCs, mobile terminals, printers and software on top of the cloud computing platform. To this end, he also strives to increase the importance of software in order to open up the connection between business and individual consumers.
Before Li Ai Ke took office, HP's board of directors has been trying to reshape HP. In Mark Hearden's post, Hewlett-Packard spent US$13.9 billion to acquire service consulting outsourcing enterprise EDS, and later acquired network equipment vendor 3Com and smart terminal manufacturer Palm.
In the past period of time, the development trend of the IT industry is entering the "vertical integration" stage, the old rival IBM's name in this area has already been very loud. Although HP completed several large-scale acquisitions for the software business, including EDS, it did not change the sales model based on PC and hardware. Hewlett-Packard as a personal computer maker has also been difficult to catch up with Apple's pace to enter a new class of mobile devices. For investors, this may mean that having the longest product line in the entire industry and creating the reputation of the world's most computers does not guarantee that Hewlett-Packard will gain a dominant position in the consumer and enterprise markets.
On June 29, Li Aike said: "From HP's global strategy, our strategy covers all products and services, from consumer products to enterprise-class products, from high-growth emerging markets to now mature. We can all cover the market segments with significant growth in the market.†At that time, he was leading all members of the Hewlett-Packard Global Executive Committee to meet Chinese government officials and key customers on a non-stop basis, including launches in Beijing, Tianjin, and Shanghai. , Chongqing and other places set up new R&D centers, opened cloud computing solution centers, and established hyperscale functional parks. At the time, there was no indication that HP's personal computer business had been marginalized.
A decisive turn toward things is still unpredictable. In July, when HP's newly released tablet Touch-Pad did not achieve the desired success, Li Ai Ke stated that he was not satisfied with the performance of the HP Tablet and smartphone business. He admitted that he had been analyzing market data and trends for some time before. According to statistics, the operating profit margin of HP's Personal Systems Division in 2010 was 5.4%, which is less than half of Apple's 15% profit margin for Mac-intosh computers. HP's entire company's operating profit margin was 11.7%. If you want to compete for monopoly, you must invest a lot of money.
Lee Ai Ke knows well that even if HP has both software and hardware capabilities, it can only increase the profit margin of the PC business by one or two percentage points, still can not change the status of the entire industry. Directors are obviously more willing to invest their money in more valuable sectors - such as corporate business units. From the perspective of strengthening the competitiveness of enterprise-level businesses, Li Ai Ke received the support and trust of the board of directors. Perhaps only in this way, Li Ai Ke has the opportunity to honor his goal to the board of directors and investors: by 2014, earnings per share will reach $7.
At this point, HP announced that it had spent $ 10.25 billion to acquire British software company Autonomy Corp. , Seeking to further enter the corporate data analysis business with higher profits. At the same time interrupted TouchPad and WebOS handset business. Since then, HP will focus on achieving higher profitability for the software and services that companies need.
The dismantling of personal computer business from quantity to quality is not a bad one for HP's personal computer business. A few years ago, Hewlett-Packard had already defeated Dell and got into the top spot in the personal computer field. However, according to Credit Suisse's forecast, by 2015, tablet PCs will account for 40% of the total personal computers, and sales will reach US$120 billion, and half of these sales will be occupied by Apple. This is a frustrating prophecy for HP, but it does not mean that HP will completely embark on the road to IBM, which once sold its PC business to China’s Lenovo Group in 2005 and began a revolution in the new industry.
Chen Lei, China's Hewlett-Packard's marketing director, said: "Different companies have different development paths, and HP will have its own unique direction, but overall it will develop in areas with higher profitability and higher added value."
HP’s personal computer business had a profit of US$567 million for the quarter ended July 31, but its revenue fell 3% year-over-year to US$9.6 billion. After the spin-off, HP will reduce its revenue by about one-third. But this is not the main trouble that Li Ai Ke is facing as HP's new CEO. The bigger question is how, after the spin-off, HP will be able to get a new life as the overall profit rate increases.
It is obviously not Li Ai Ke's intention to reshape his spin-off. On the day of the new global strategy for HP on March 14, this year, in response to media rumors about HP's spin-off of the PC business, he said, "This is a rumor that I can't stand." For Li Aike, the "moving place" of HP's CEO position lies in the size of HP, and the personal computer business is an integral part of HP's new strategy of "successfully winning." In the direction of the CEO's "Hewlett-Packard full business to the mobile Internet and cloud computing transformation" carefully constructed, HP will put its full line of products including servers, PCs, mobile terminals, printers and software on top of the cloud computing platform. To this end, he also strives to increase the importance of software in order to open up the connection between business and individual consumers.
Before Li Ai Ke took office, HP's board of directors has been trying to reshape HP. In Mark Hearden's post, Hewlett-Packard spent US$13.9 billion to acquire service consulting outsourcing enterprise EDS, and later acquired network equipment vendor 3Com and smart terminal manufacturer Palm.
In the past period of time, the development trend of the IT industry is entering the "vertical integration" stage, the old rival IBM's name in this area has already been very loud. Although HP completed several large-scale acquisitions for the software business, including EDS, it did not change the sales model based on PC and hardware. Hewlett-Packard as a personal computer maker has also been difficult to catch up with Apple's pace to enter a new class of mobile devices. For investors, this may mean that having the longest product line in the entire industry and creating the reputation of the world's most computers does not guarantee that Hewlett-Packard will gain a dominant position in the consumer and enterprise markets.
On June 29, Li Aike said: "From HP's global strategy, our strategy covers all products and services, from consumer products to enterprise-class products, from high-growth emerging markets to now mature. We can all cover the market segments with significant growth in the market.†At that time, he was leading all members of the Hewlett-Packard Global Executive Committee to meet Chinese government officials and key customers on a non-stop basis, including launches in Beijing, Tianjin, and Shanghai. , Chongqing and other places set up new R&D centers, opened cloud computing solution centers, and established hyperscale functional parks. At the time, there was no indication that HP's personal computer business had been marginalized.
A decisive turn toward things is still unpredictable. In July, when HP's newly released tablet Touch-Pad did not achieve the desired success, Li Ai Ke stated that he was not satisfied with the performance of the HP Tablet and smartphone business. He admitted that he had been analyzing market data and trends for some time before. According to statistics, the operating profit margin of HP's Personal Systems Division in 2010 was 5.4%, which is less than half of Apple's 15% profit margin for Mac-intosh computers. HP's entire company's operating profit margin was 11.7%. If you want to compete for monopoly, you must invest a lot of money.
Lee Ai Ke knows well that even if HP has both software and hardware capabilities, it can only increase the profit margin of the PC business by one or two percentage points, still can not change the status of the entire industry. Directors are obviously more willing to invest their money in more valuable sectors - such as corporate business units. From the perspective of strengthening the competitiveness of enterprise-level businesses, Li Ai Ke received the support and trust of the board of directors. Perhaps only in this way, Li Ai Ke has the opportunity to honor his goal to the board of directors and investors: by 2014, earnings per share will reach $7.
At this point, HP announced that it had spent $ 10.25 billion to acquire British software company Autonomy Corp. , Seeking to further enter the corporate data analysis business with higher profits. At the same time interrupted TouchPad and WebOS handset business. Since then, HP will focus on achieving higher profitability for the software and services that companies need.
The dismantling of personal computer business from quantity to quality is not a bad one for HP's personal computer business. A few years ago, Hewlett-Packard had already defeated Dell and got into the top spot in the personal computer field. However, according to Credit Suisse's forecast, by 2015, tablet PCs will account for 40% of the total personal computers, and sales will reach US$120 billion, and half of these sales will be occupied by Apple. This is a frustrating prophecy for HP, but it does not mean that HP will completely embark on the road to IBM, which once sold its PC business to China’s Lenovo Group in 2005 and began a revolution in the new industry.
Chen Lei, China's Hewlett-Packard's marketing director, said: "Different companies have different development paths, and HP will have its own unique direction, but overall it will develop in areas with higher profitability and higher added value."
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