Hewlett-Packard Company (NYSE: HPQ) shares are up marginally after Gartner and IDC released preliminary results for the fourth quarter showing HP and Dell Computers
(NYSE: DELL) tied for the top market share. The computer manufacturer
showed an overall growth of 14% with net revenues of $104.3 billion in
fiscal 2007 with a large portion of its revenues coming from overseas.
This has many investors and analysts believing that HP could be a
recession-proof technology play.
HP has been very strong globally despite a slowing U.S. economy with
67% of its total revenues coming from outside the U.S. In the fourth
quarter, the company saw Asia-Pacific revenues increase by 20%, EMEA by
19%, and Americas by 10%. Meanwhile, BRIC countries grew 37%
year-over-year in the fourth quarter and accounted for 9% of total
revenue.
The strongest revenues were seen in its personal systems group
followed by its imaging and printing group and enterprise storage and
services group. Meanwhile, the fastest growing group continues to be
its software group, which saw growth of 74%; however, it only accounts
for around 2% of total revenues. And HP’s service revenues came in
second by growing around 12% to $2.3 billion.
CEO Mike Hurd is largely to credit for this huge turnaround for HP
after cutting around 15,000 jobs and expanding into India and China.
The strategy is expected to pay huge dividends this year as the U.S.
economy is expected to grow just 1.9% versus 2.2% last year, according
to the World Bank. Meanwhile, China is expecting to grow 10.8% and
India is expected to grow around 8.4%.
Currently, HP’s stock is trading at around $44 per share with a
market cap of around $112 billion. The drop in the stock is mostly due
to macro-economic issues in the United States. This may be a great
long-term buy-and-hold opportunity for value investors looking to take
a position in a recession-proof company. In the end, HPQ is definitely
a stock worth watching!
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