H-P Enters the Niche PC Gaming Market With Its Voodoo Purchase

Includes: DELL, HPQ
by: Jonathan Liss

Excerpt from our One-Page WSJ Summary:

H-P Plans to Buy Voodoo, Start Push Into Gaming

Summary: In a bid to enter the highly lucrative PC gaming market, Hewlett-Packard (NYSE:HPQ) announced it would purchase specialty-gaming computer company Voodoo Computers. The closely-held company with just 30 employees expects $115 million in revenues this year selling its specialty computers for an average of $5,000 a pop - compared to the $800 average of no-gaming PCs. The PC gaming market is a niche market which pulls in as much as $1 billion a year, and is a market HP has apparently wanted to enter for some time. Todd Bradley, executive vice president for HP's PC group, said the company has looked at the gaming space as an expansion area over the past year. The move comes on the heels of Dell's (DELL) purchase of Alienware Corp. in March, a PC company also popular with gamers.
Related links: Full WSJ article • ZDNet News: HP to acquire Voodoo PC • Hewlett-Packard Q3 2006 Earnings Conference Call Transcript • Comparative Valuation: Price/Sales (Trailing 12 Months) for Computer Hardware CompaniesDell Goes for the Gamers With Alienware Acquisition
Potentially impacted stocks and ETFs: Companies like HP and Dell would love to grab a share of the console gaming business. Potentially affected companies include Sony (NYSE:SNE) - PS3, Nintendo (OTCPK:NTDOY) - Wii and Microsoft (NASDAQ:MSFT) - XBox360.

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