HP sees positive netbook effect

February 26, 2009

Stripped down, low-cost netbooks may be the hottest thing going in personal computers these days, but there continues to be debate about their ultimate impact on the income statement. Almost all of the world’s major PC companies have by now dived into the netbook market, including Hewlett-Packard, the world’s No. 1 PC maker.

HP CFO Cathie Lesjak was asked at the Goldman Sachs Technology and Internet Conference whether the company expects to see a netbook impact on average selling prices (ASPs) and margins.

“I think you really need to separate ASP pressures from margins. Because first off we actually believe that netbooks in the long term are going to… generate incremental revenue and ultimately incremental profits … The netbook also has a lower bill of materials… If you’ve got good cost structure … long term we actually think this is positive for PC revenue and profit.”

Lesjak was also quizzed about the impact of Microsoft’s new Windows 7 operating system – which the software company says will be out by January 2010 – on consumer and corporate demand.

We didn’t think there was going to be a Vista moment. We don’t think there’s going to be a Windows 7 moment either… We are not expecting that there’s going to be this huge hockey stick effect when Windows 7 comes out. The good news is we’re hearing positive things about Windows 7.

Last week, HP slashed its full-year forecast, saying it expected weak market conditions to persist. Lesjak said Thursday she was “very confident in the earnings goals that we laid out for you in the earnings call last week and confident that we’ll generate strong cash flow in 2009.”

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