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Hewlett-Packard and the Personal Computer Industry

In: Business and Management

Submitted By littlet1428
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HP: Stay or Leave the PC Industry
The computer industry is a tough and competitive business. Companies are constantly competing to have the newest and greatest advancements in technology that will make their product the most appealing to consumers. It is a multi billion-dollar industry, but in mid August Hewlett Packard, the worlds largest PC distributor made the announcement that it planned to exit the Personal computer industry to focus on other aspects of their company. This shocked not only consumers, but also other competitors in the industry. Just a few months after Leo Apotheker, the CEO who made this decision, was fired from his position and replaced by Meg Whitman. When Whitman was hired she made it clear that “Apotheker's plan to exit PCs would still be considered.” For about three months this left Investors unsure about the HP stock and in just three days the stock dropped about $10 per share. It wasn’t until late October that Whitman officially announced the HP would stay in the PC business. Was this the right thing to do for the company or should they have exited the business to focus on other facets of the company?
“Hewlett Packard’s revenue from last year was 92,755 million. The Personal Computer Group (PCG) brought in more that 30% of that revenue pulling in 30,458 million. Looking at this data it seems that getting rid of this line would be foolish and risky for the company. Apotheker though was focused more on the operating margin the PC industry was producing. The operating margin is an important number because it can distinguish between a profitable product and one in which money is just being wasted with. After looking at the financial data, the Profit margin for the Personal computer line was only 5.9% meaning that only $.059 was being collected for every $1 of sales. Although the line was still profitable its understandable how a company

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