{"id":338713,"date":"2019-09-04T07:22:46","date_gmt":"2019-09-04T05:22:46","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=338713"},"modified":"2019-09-04T07:22:46","modified_gmt":"2019-09-04T05:22:46","slug":"a-look-at-the-recent-share-price-performance-of-global-handset-makers","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/internet\/338713\/a-look-at-the-recent-share-price-performance-of-global-handset-makers\/","title":{"rendered":"A look at the recent share price performance of global handset makers"},"content":{"rendered":"
Back in the day, PCs were hip and investors chased computer stocks to sky-high valuations. Everyone was buying a desktop, and then a laptop, and the companies that supplied them could do no wrong.<\/div>\n
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Then came the smartphone. We all know to blame Apple Inc. for the end of the PC era. Though Steve Jobs didn\u2019t invent the \u201cphone + internet\u201d mash-up, the iPhone spurred competitors to make such devices useful and customers took to them with glee. A decade-long smartphone boom followed.Take a look at the recent share price performance of handset makers and there\u2019s not much left to be gleeful about. As handsets got boring, so too did the shares of the companies that relied on them for revenue.HTC Corp and Xiaomi Corp, two of the few firms left that focus on handsets, have seen their shares plummet in the past year. PC makers, on the other hand, have been a little more exciting.<\/p>\n

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Yet if you divide the universe of smartphone and PC makers in two, you\u2019ll discover something interesting: Those that primarily focus on corporate customers\u00a0or lead the market in a key non-consumer business\u00a0are outperforming those that get a larger slice of revenue from\u00a0smartphones and\u00a0consumer PCs.<\/p>\n

Since Dec. 21, when Dell Technologies Inc. started trading again after a take-private deal in 2013, its shares jumped 21%. International Business Machines Corp, Samsung Electronics Co and Hewlett Packard Enterprise Co have all climbed since that date. By contrast, LG Electronics Inc, Lenovo Group Ltd, HTC, HP Inc, Acer Inc and Xiaomi all dropped.<\/p>\n

The first major outlier is Apple. I suspect that\u2019s because fund managers sitting on piles of cash realized that it probably makes sense to put money into companies with fat\u00a0margins and a cult following, even if it\u2019s lost a little luster. ZTE Corp. also did well, but that\u2019s mostly because it\u2019s recovering from being at the wrong end of U.S. national-security policy.<\/p>\n

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Instead of looking at PCs versus smartphones, a paradigm that worked well for around a decade, the better way for investors to divide the technology-hardware sector is consumer and enterprise. The two HPs \u2013 Enterprise and Inc \u2013 serve as the perfect example.<\/p>\n

HP Inc gets 60% of its revenue from desktop and notebook PCs, while HP Enterprise sells servers, storage and networking services. HP Enterprise is up 10% while HP Inc. fell 7% over the period. IBM is up 22%, Acer is down 13% and Xiaomi has fallen 36%.<\/p>\n

The lines do get a little blurred. Lenovo, for example,\u00a0is also\u00a0in the server and smartphone businesses, and Dell\u00a0gets around 11% of its revenue from consumer PCs.<\/p>\n

Having divided their investible universe along these new fault lines, however,\u00a0punters would be foolish to believe that the bull-run in enterprise will continue unabated. Both HPE and Dell last week raised their full-year earnings forecast, spurring shares to rise.<\/p>\n

In reality, that bottom-line strength appears to come from better margins and cost control rather than a rosier outlook for revenue.<\/p>\n

\u201cWe\u2019ve tried to position the company to be successful in any\u00a0economic environment,\u201d\u00a0Dell CFO Tom Sweet told Bloomberg News. That kind of attitude deserves the 10% single-day spurt\u00a0the stock received. But cost control can only go so far. If a global economic slowdown and the trade war don\u2019t abate, then not even fiscal pragmatism can save earnings.<\/p>\n

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Sell-side analysts are adjusting accordingly. They\u2019ve trimmed most companies\u2019 2019 revenue forecasts over the past six months, as well as next year\u2019s EPS estimates.<\/p>\n

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By examining more closely the end-market and customer base for each company, investors will find it easier to sort likely winners from losers. In the face of even bigger problems for the economy, however, a new analytic framework won\u2019t change the fact that tough times are still ahead.<\/p>\n

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Read: Hisense in talks to make phones in South Africa<\/a><\/strong><\/p>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

Back in the day, PCs were hip and investors chased computer stocks to sky-high valuations. Everyone was buying a desktop, and then a laptop, and the companies that supplied them could do no wrong.<\/p>\n","protected":false},"author":59,"featured_media":203388,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9882],"tags":[51,26,273,14293,1388,505,52,7210,1466],"class_list":["post-338713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-internet","tag-apple","tag-headline","tag-hewlett-packard","tag-hp-inc","tag-lenovo","tag-lg-electronics","tag-samsung","tag-xiaomi","tag-zte-corp"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/338713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=338713"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/338713\/revisions"}],"predecessor-version":[{"id":338733,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/338713\/revisions\/338733"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/203388"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=338713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=338713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=338713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}