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HP holding strong in Europe

New research shows sales of Hewlett-Packard PCs may be off to a good start in Western Europe, just two months after the completion of the company's multibillion-dollar merger.

A new research report shows Hewlett-Packard PC sales are holding steady in Western Europe, just two months after the completion of the company's multibillion-dollar merger.

Although the overall market has been weak, the PC maker managed to maintain a significant market position, although it did fall slightly, in Western Europe going into the second quarter, according to Context, a London-based research firm that tracks PC sales in Western Europe.

HP's market share was 27.8 percent for the first five months of 2002, the research firm said. In contrast, HP and Compaq Computer together claimed 29 percent of the Western European market in 2001, when the two were still separate companies. Sales fell 13.9 percent year over year for the first five months of the year, compared with a 10 percent decline for the industry overall.

Context researchers called the slight change in market share a victory, considering the tough market and the potential for further share loss following a tumultuous merger battle.

"That's not too bad, considering what people thought they were going to do," said Context analyst Jeremy Davies. "So far the change has been relatively minimal. It looks like they're doing a good job in Europe."

HP enjoys a strong presence in Western Europe, both in sales and in product development, as many of its desktop PCs are designed or manufactured in Grenoble, France. Post-merger cutbacks will hit the company's European operations, however. HP plans to cut about 5,900 jobs in Europe as part of an overall effort to reduce total employment by 15,000 and trim $3 billion in costs.

PC sales in Western Europe will continue to be depressed, Context said. Overall sales for the quarter are expected to fall by 10 percent versus earlier expectations of 5 percent to 7 percent, Davies said.

The data backs up claims by Intel and Advanced Micro Devices, companies that pointed to weaker-than-expected sales in Europe for lowered earning expectations for the second quarter.

Looking ahead, businesses are expected to remain cautious, Context researchers said. As a result, the outlook for PC sales in Europe is likely to remain depressed for the remainder of the year.

Unlike research firms such as IDC or Gartner, which track the number of PCs shipped by PC makers (called "sales in"), Context tracks "sales out," or actual purchases by businesses or consumers.