Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:
Why HP Has Unseated Dell by Mark Veverka
Summary: In less than two years, Executive Vice President of Personal Systems Group Todd Bradley has turned Hewlett-Packard (NYSE:HPQ) into the top PC maker in the world. A unit that once dragged earnings down, the company's PC division now accounts for about one third of total revenues. Cost cutting and higher quality production are responsible for improved PC margins, which climbed from break-even in FY 2003 to almost 4% in FY 2006. Strong overseas sales account for much of HP's revenue growth, as demand for pricey notebook computers is strong in such countries as India, where HP is the top selling brand. Within the U.S., HP maintains a larger slice of the consumer market than competitors, including Dell (NASDAQ:DELL), which only operates domestically. HP's distribution method of selling from third party stores, once considered a cost disadvantage, has proven wise in the sale of notebook computers, as consumers want to get a first hand feel of the hardware they're buying.
Related Links: Forecasting the PC Market's Future: The Rise of HP, The Fall of Dell • Dell #1 PC Seller for 2006 • Dell Losing Market Share, Hewlett-Packard Maintaining