Hewlett-Packard (HPQ) is a well-known brand in the technology industry. Over the years, the company has managed to build a strong reputation in the global market with a diverse portfolio of products and services. In this analysis, I will discuss some of the most recent developments that will affect the company's competitive advantages. The most prominent among these developments are acquisitions and divestment plans that the business has announced recently, formation of new partnerships, launch of new innovative products and introduction of aggressive market expansion strategies.
Hewlett-Packard has always targeted a greater market share with its diversified portfolio of innovative products and services. It has recently launched the HP 3PAR, a program that allows clients to boost returns on investment in server utilization by effectively doubling the performance of physical server virtual machines. This innovative new technology has tremendous commercial applications in the future as it promises to boost the capacity of virtual servers by two times.
Apart from this, the company remains as dedicated as ever to push for greater share of the business market. For this reason, Hewlett-Packard has recently unveiled its latest fleet of state-of-the-art high-tech business-oriented commercial computers that are specifically engineered to cater to designing, reliability, performance and security needs of businesses and end-users. This will significantly help Hewlett-Packard in widening its competitive moat in the global market for Ultrabooks.
Hewlett-Packard has assembled a temporary moat around its server and cloud computing businesses. The company has taken a string of recent initiatives that should provide it with the impetus to drive for greater growth and higher revenues. According to a recent announcement, Hewlett-Packard plans to create the highly intuitive OpenFlow system, an innovative automated network program that has the capacity to respond to a series of cloud demands.
The announcement comes at a time when the stock faces aggressive competition from Cisco (CSCO) and Juniper (JNPR). This development is being hailed as the next important step in the evolution of personal clouds. The eventual development and launch of this technology will certainly help the stock in widening its competitive moat in the market by helping it garner a greater market share.
Among other positive developments for the company is its decision to unveil a novel "mobile" printing and scanning unit that is bound to capture the attention of a global audience. Being roughly half the size of a conventional desktop printer, the new "Officejet 150 Mobile All-In-One" is designed to undertake printing, copying and scanning jobs for users who are constantly on the move. The development of this innovative new product is a testament of Hewlett-Packard's resolve to target emerging markets where printed paper is the preferred choice of many businesses over Apple and Samsung manufactured mobile devices.
The company has also made clear its intention to expand its award-winning portfolio of "Thin & Light" Ultrabook systems and Sleekbooks. The most recent additions to the series, such as the HP Envy SpectreXT, have tremendous commercial as well as domestic applications. Therefore, I strongly believe that this innovative product holds tremendous monetary promise for the business.
Even when judged from the aspect of total capital employed and overall market share, Hewlett-Packard is a huge business. Its price to earnings ratio of almost 8 is impressive when judged against similar figures of Cisco (12.38), Juniper (29.59) and Dell (7.97). The stock has maintained a stable dividend history with a yield of more than 2%. Looking at all these impressive financial indicators and the recent news and developments surrounding the stock, I strongly believe that Hewlett-Packard is poised for higher growth and higher gross margins in its current fiscal year.
Dell (DELL) has failed to perform at par with the expectations of its investors and has missed its projected financial targets for the first fiscal quarter. However, the dismal performance has largely been the result of a series of billion-dollar acquisition plans that have consequently reduced the company's revenue margins. The most important among these acquisitions are SonicWall, Wyse and Make Technologies for the fact that they will allow Dell to widen its competitive moat in the industry.
Another possible reason for the deficit in revenue margins could be the recent hard disk-drive crisis which put a BIG question mark in the minds of investors on whether the company has the capacity to drive for higher revenue and consistent profit growth. Although the recent acquisition plans do hold promising future prospects for the business, prudent potential investors have been cautious in approaching the stock while existing shareholders are skeptical. In terms of financial performance, Hewlett-Packard has easily overshadowed Dell in the current fiscal quarter, as it promises a more optimistic outlook for investors.
IBM (IBM) is currently riding the high tide and has managed to post a strong quarterly performance in the current financial year. This is reflected in IBM's financial reports for the first fiscal quarter all of which stand as a testament to the fact that the stock has exceeded the earnings and revenue projections of analyst estimates. IBM's strong performance has largely been the result of a determined focus on long-term growth and its aggressive and calculated drive towards higher value markets. This strategy has helped the stock on its way up and leads me to believe that IBM is among the few direct competitors of Hewlett-Packard that is actually a formidable challenge.
With the introduction of new innovative technologies and more in the pipeline, there is little contention that Hewlett-Packard is poised for higher growth in the current financial year. As a result, I strongly advise existing stockholders to hold their position as there is a better chance for higher returns in investments, especially when the stock's recent impressive growth is taken into account. Over the course of the next two months, the stock will have widened its competitive moat with the introduction of a new range of diversified products and services.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
