It appears the tides have yet to turn in favor of Hewlett-Packard Company (NYSE:HPQ) after the struggling tech firm confirmed that they plan on cutting 8,000 jobs in Europe by the end of 2014. The plan was originally reported on by German news outlet, WirtschaftsWoche.
HP executives confirmed the European cuts and added that further job cuts in Africa and the Middle East may follow.
This hedge fund is so optimistic about COVID-19 that they’re short Clorox [In-Depth]
A lot has happened since the coronavirus pandemic began, but aside from the temporary selloff in March, the stock market has continued to hum along as if nothing has been happening. There's no denying that the financial markets have been changed by the pandemic, and investors should be thinking differently when it comes to investing Read More
This is just the latest disappointing news out of HP as the firm looks to get smaller and more efficient. In addition, HP originally was relying on China to help get the company back on track. However, the latest report out of China may suggest otherwise. Lenovo is rapidly growing share in China and throughout the world as the PC recently became the number two computer maker in the world, behind HP.
Lenovo’s 1Q earnings report for 2012 showed global sales rose 42% and currently a 13.4% stake in market share. Most of this surprising rise to greatness was due to Lenovo’s focus of going after HP’s largest clients. Now, Lenovo is threatening to become the first Chinese consumer tech brand which does HP no favors in its revival.
As the world economy continues to struggle with the recovery, PC sales continue to lag as well. Some analysts predict that HP’s revival may not come until the world economy starts back up again which could be awhile. Until then, HP must continue to cut costs and look for at least temporary solutions to its problem.
Aside from HP, Lenovo’s rise to power may threaten Apple Inc. (NASDAQ:AAPL)’s future success in China. Lenovo recently opened a store in China and unveiled a new program called “Dreams Come True”. The program essentially totes Lenovo’s low priced laptops which start at $300, a steep discount from HP and Apple products.
However, Apple is no HP and it will certainly take a lot more effort and resources to dethrone Apple. Simply put, Lenovo can not compete with Apple when it comes to tablets and smartphones. Not to mention even the tech giant’s new retina display Macs will be hard to beat as well.
The bottom line here is that HP’s original plans for its recovery have to be altered. Lenovo’s rise to power makes relying on the Chinese consumer a little more difficult. As for Apple, Lenovo is more of an inconvenience than a threat at this point in time.
Disclosure: No positions