Month: October 2012

Recent research reports from UBS analysts suggested that Hewlett-Packard Co. (HPQ) should separate their business. The splitting of the company’s consumer and enterprise businesses could potentially raise the company’s value.

Creating powerful computer systems along with printers to suit the needs of an enterprise compared to simple computers for day-to-day use by the average consumer is different. The mix of these two businesses can cause unwanted misconceptions of HP’s brand. The separation of HP’s businesses can allow focus and re-branding of its products aimed at different markets. If HP were to separate its business division from its consumer division, HP can reposition and focus its separate brands towards specific markets to better compete against its competitors. Potentially, this could raise sales and improve their brand image.

Although separation can bring about a strong brand, will it be beneficial in the long run? In the current economy, many companies are cutting costs to keep up with profits. By splitting into two entities, HP will incur further costs in production and staffing. Furthermore, splitting may not necessarily increase HP’s branding power as it has established itself as a strong force in the computer and printers market regardless of the targeted audience.

More information can be found here and here.

As the price of gasoline rises more and more, consumers are transitioning to smaller cars. Why buy an expensive, gas-guzzling car, when one can buy a smaller hybrid for a much more affordable price? Consumers can afford more features for a smaller car compared to trucks or S.U.V.s. Smaller cars have better fuel efficiency than larger cars, and there are more compact hybrids than hybrid trucks.

General Motor’s Co. (G.M.) and Ford Motors Co. (Ford) (Both companies who specialize in producing larger cars such as trucks, S.U.V.s) have begun producing many more small cars in response to the change in tastes for consumers. Toyota and Honda still continue to be in the lead in small car development and U.S. automakers have to be creative to sway consumers into purchasing their products.

Since the bailouts in 2009, G.M., Ford, and Chrysler have come a long ways. They have made their mark in the small car market, and continue to be competitive. Currently, G.M., Ford, and Chrysler are having the best sales in four months due to the surge in small car purchases. Can these automakers who traditionally produce large cars keep up with the likes of Toyota and Honda?

More information here.