BEIJING, Aug 24, 2011 (SinoCast Daily Business Beat via COMTEX) -- Although many people believe that PC business is not lucrative, some companies still hold the opinion that the PC market has great growth potential.
Lately, Hewlett-Packard, the world's championship in terms of PC shipment, which just forayed into the tablet computer market last year through acquiring Web OS from Palm Inc. , announced that it intended to sell its PC division that accounts for nearly 30% of its operating revenues.
Insiders guess that potential buyers include Lenovo Group Limited (sehk:0992) and Samsung Electronics. On August 23, 2011, Lenovo CEO Yang Yuanqing told reporters when receiving an interview that he would not make any comment in the guess. However, he has not denied the possibility. On August 19, Yang Yuanqing reveals that Lenovo was considering possible mergers and acquisitions.
The selling of PC business by Hewlett-Packard is similar to the acquisition of Motorola Mobility Holdings Inc. (MMI) by Google Inc. (GOOG).
Ian Yang, president of Intel China region, points out that tablet computers will not take the place of PC and the PC market will maintain continuous growth in the future.
Credit Suisse Group (CS) estimates that the PC business of Hewlett-Packard is worth USD 12 billion or HKD 93.6 billion. The sale will be the largest transaction in the PC market since 2002, when Hewlett-Packard bought Compaq.
Among the potential buyers, Lenovo is believed to be the most likely winner of the deal. Latest data from IDC say that Lenovo takes 12.2% of the global PC market in the second quarter and the figure will double if it successfully buys PC business from Hewlett-Packard. Thus, Lenovo will outpace Dell and become the bellwether in the global PC market.
Yang Yuanqing deems that Lenovo will realize profit growth, innovation and long-term success as long as it adopts proper strategy, promotes quality products and has strong execution.
Analysts point out that the acquisition of PC business from Hewlett-Packard will further improve the performance of Lenovo, although the latter bought similar business from IBM in 2005, since Hewlett-Packard focuses on individual customers while IBM is oriented to corporate customers.
AASTOCKS.com guesses that instead of the PC business of Hewlett-Packard, Samsung is more interested in the Web OS platform so as to challenge Apple Inc. (AAPL) in the smart phone and tablet computer market.
With market share eroded by Apple, the net profits of Hewlett-Packard from PC business slipped from 8% of July 2010 to current 5%. Market expectations say that the operating profit margin of Hewlett-Packard will climb from current 12% to 15% if it sells PC business.
(USD 1 = CNY 6.39; USD 1 = HKD 7.80)