Hedged In

Will Dell Buy Acer?

Very interesting -- particularly given Acer's strong position in netbooks.

Netbook Sales Cannibalizing PC Revenues

Anecdotal data point: I was in a Best Buy in NYC yesterday, and most of the people looking at computers were interested in the lowest price netbooks. The model that was getting most attention in Best Buy was their cheapest model on show: an MSI Wind netbook with a 10" screen, 1GB of RAM, a 160GB hard drive and a 3 cell battery (less good than a 6 cell) for $310. You can see it on Amazon here: www.amazon.com/gp/sear...

Netbook Sales Cannibalizing PC Revenues

It's helpful to see someone try to quantify the impact of netbooks. I'm not sure about the assertion that netbooks were 9% of the laptop market in 2008, but it's probably possible they could reach 20% of the laptop market in 2009.

Are they 50% below the average cost of a laptop? Currently, netbooks are selling at $350, so if the average laptop price is $700, that's about right.

Netbook Sales: Cannibalizing Notebooks or Incremental?

Useful excerpt - thank you.

So Intel claims that sales of netbooks won't cannibalize sales of notebooks. But it depends on:

1. Are netbooks a substitute for notebooks, or a totally different product? My guess: they're a substitute.

2. Will the lower price of netbooks expand the total market size in $ terms? My guess: in this economy, they'll shrink the market because netbooks are so much cheaper than notebooks, and the total volume of netbooks/laptops purchased won't rise enough to offset the price impact.

And finally, there's an element of "Well, Intel would say that, wouldn't they?" And remember, Intel just slashed guidance.

HP Grows Stronger and More Profitable - Barron's

This is helpful data on HP's businesses, and the discussion of the printer business is particularly thought provoking. However, I'm sceptical overall on HPQ for the following reasons:

1. Mark Hurd has done an outstanding job reducing waste at HP, but that means there are fewer costs to cut now.

2. There's a reasonable likelihood that consumers will reduce spending and switch from more expensive laptops to netbooks -- see comments on netbooks here: seekingalpha.com/accou.... As the article points out, that's 10% of operating profits.

3. HPQ's corporate IT business is heavily exposed to capital spending by businesses. 2009 doesn't look as though it's going to be a rosy year for business capex.

Overall, Barron's case for HPQ's stock seems somewhat backward looking -- it's based too much on Mark Hurd's excellent track record until now. (Full disclosure: no position in HPQ, long or short.)

Netbook Sales Projections Are Way Low: Quick Reality Checks

Good discussion of the netbook market. The stock that will be most impacted isn't mentioned -- it's Apple, which doesn't have a netbook product.

Dell Inc. F3Q 2009 (Qtr End 10/31/08) Earnings Call Transcript

Does anybody know what Dell's netbook strategy is?

Dell: Costs Drop, But So Does Demand

Hard to tell whether Dell's reserves on its financing business are really enough, and that introduces risk into the stock.

Look at it this way: How many banks in the last year have said their reserves on loans were enough?

PC Makers Face Netbook Peril - Barron's

To get netbooks really cheap, the vendors will have to cut out Microsoft. The problem is that most PC vendors don't think that Linux is ready yet for mass adoption by consumers.


On Nov 02 02:28 PM Roger Knights wrote:

> What she meant, I think, is that some of these netbooks ship without
> Microsoft Windows, or with a cut-down, low cost version of it.

PC Makers Face Netbook Peril - Barron's

Perhaps one of the biggest losers from the popularity of netbooks is Apple -- they don't have a low cost laptop to compete in this category.