The world’s largest information technology merger is over, but analysts remain sceptical about how the new-look Hewlett-Packard (HP) will fare against major competitors IBM and Dell.
The official end to the merger between HP and Compaq, and two consecutive profitable quarters, have somewhat eased the flak the deal attracted. Critics argued that it would dilute its strong printer base and not realise shareholder value.
HP’s aim was to better position itself as a competitor to IBM, still the world’s biggest information technology company and a provider of “all-in-one” solutions, including services and hardware, and Dell, which has a lean and profitable direct sales strategy.
In a bid to consolidate, HP is moving to a direct-sales campaign in certain countries. This is Dell’s hallmark — the company has made its name by selling directly to customers through the Internet.
The move is intended to complement HP’s complex channel strategy, in which it uses partners to resell its products. HP hopes this will service markets not met by its sales channels.
South Africa is not among these. But there will be a local initiative called “collaborative direct”, in partnership with existing resellers, says HP South Africa’s Adrian Delport.
Reviewing its results for the three months ending on April 30, HP’s Eric Cador said quarter on quarter revenue was up 1%, while that of its competitors was down.
Cador, senior vice-president of HP’s personal systems group in the Europe, Middle East and Africa region, also pronounced the merger complete, saying it had taken 12 months instead of the expected 18 months to two years.
HP had revenues of $18-billion for its second fiscal quarter, earning $659-million, or 22c a share. It generated cash from operations of more than $2,5-billion and reduced structural costs by $3,5-billion, according to the results.
While conceding HP had lost some market share and revenue during the merger, Cador stressed it had reversed the market share erosion it experienced in the first six months.
He said HP now had 19,5% market share in Europe, the Middle East and Africa in terms of units sold, while Dell had 11,6%.