The reason behind Hewlett-Packard Company (NYSE:HPQ)‘s increased sales in its third quarter for the current fiscal year was explained by Tim Bajarin, President of Creative Strategies, in a discussion on CNBC.
According to the analyst, Hewlett-Packard Company (NYSE:HPQ) saw a boost in sales in the just-ended quarter largely because of buying activity from among enterprise customers.
“We as analysts have been tracking PC sales for the last two quarters and while we were down last year a full 10%, we’re only going to be off a negative, maybe 2%-3%, partially because corporate sales of PCs have actually risen this year and that has been strong. Part of that has been a refresh rate […],” he explained.
Bajarin went on to explain that every two to three years, businesses see an increase in machines that are too old which would have to either be updated or replaced. He added that businesses waited last year and started to buy computers this year.
Moreover, Bajarin said that 2014 is the first big year wherein corporate computer acquisitions start to grow again. However, he noted that Hewlett-Packard Company (NYSE:HPQ) also saw a boost in their sales for their fiscal third quarter of 2014 from the consumer side of the market because of back to school sales during the quarter. To judge the company’s sales increase, one has to look for its performance this current quarter, he added.
Meanwhile, Bajarin noted that challengers such as the Lenovo Group Ltd. and Dell Inc. pose a big challenge to Hewlett-Packard Company especially in the corporate market for computers in the U.S. Nonetheless, the analyst noted that the good news is that in computers as well as servers and other back-end equipment, there is healthy demand for these companies fulfill. However, Bajarin also noted that Dell Inc. and Hewlett-Packard Company (NYSE:HPQ) will face stiffer competition from the Lenovo Group Ltd., because it has just bought the server business of International Business Machines Corp. (NYSE:IBM).
Hewlett-Packard Company (NYSE:HPQ) investors include Ralph V. Whitworth‘s Relational Investors which reported about 27.8 million shares in the computer maker at the end of the first half of the year.
Disclosure: None
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