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B&E This Fortnight
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Issue Date - 15/03/2012
HP’s bad run not over

The personal computer industry continues to struggle with consumers showing strong preference for i-Phones and i-Pads. Not surprising then that Hewlett-Packard, amongst the world’s biggest computer makers, is faced with its own challenges. Investor confidence in the company continues to tumble and the company’s present market cap has tanked to about $54 billion as compared to almost $104 billion a year ago. For the quarter ended January 31, HP’s profit dropped by 44% while revenue fell 7%. To make matters worse, the company’s forecast says it is up against weaker-than-expected results for the quarter ending April 31. Overall, HP posted fiscal first quarter net income of $1.5 billion, or 73 cents a share, compared with $2.6 billion, or $1.17 a share, a year ago. Revenue declined to $30 billion from $32.3 billion in the same period. Analysts say that the company’s supply chain is in a complete mess. Floods in Thailand have also hurt it badly. However, the company’s co-chief executive Meg Whitman is hopeful that her plans for cost cutting, investing more in areas such as online cloud computing, security, and tools that help businesses manage data, will help HP win back lost ground. Various analysts have also recommended investors to stay invested in the company for the long run. But to win back investors’ confidence, HP will have to try harder and race against time to make itself healthy again.

Apple hints at paying out dividend

Apple’s CEO Tim Cook has given hints that the company with about a $100 billion in cash may at last give in to its investors’ wishes and pay a special dividend. Under the regime of its legendary ex-CEO Steve Jobs, the company maintained a policy of not paying dividends and conserving cash for the purpose of reinvestment. The last time that the company paid dividend was in October 1995. However, this time around, though many are in favour of the company paying dividend, some investors are divided in their opinion about the type of dividend to be paid and even whether it should be given. Despite the uproar that Apple should spend its cash, the tech giant is not the only one sitting on a cash pile. Google and EMC, for example, are among the handful of big names eschewing dividend payment. At the other end of the scale, companies like IBM and HP are regular dividend payers, while Microsoft made its first payment in 2003, and Cisco announced its first-ever cash dividend last year.


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