Traditional retail strategy pays off

Article Excerpt

HEWLETT-PACKARD CO. $32 (New York symbol HPQ; Conservative Growth Portfolio, Manufacturing & Industry sector, WSSF Rating: Above average) is starting to realize some of the benefits from its acquisition of Compaq Computer in May 2002. Compaq greatly increased Hewlett’s exposure to the increasingly competitive personal computer market. Its main rival, Dell Inc., which sells its products directly to consumers over the phone or Internet, also has more flexibility than Hewlett to cut prices. However, Hewlett’s strategy of partnering with major retailers like Best Buy helps it appeal to first-time buyers who are reluctant to buy over the phone or online. Hewlett is also doing a better job marketing its computers, showing users how easy it is to play movies and music instead of focusing on chip speed and other technical data. This plan also gives Hewlett an edge in overseas markets, where phone and Internet service is less reliable. Hewlett is still the world’s second-largest computer maker behind Dell. But its market share…

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