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H-P & Google Stop Chromebook 11 Sale - Analyst Blog

Posted
11/14/2013 1:05:00 PM
By: Zacks.com
Referenced Stocks:AMZN;BBY;GOOG;HPQ

Reportedly, Hewlett-Packard ( HPQ ) and Google ( GOOG ) have stopped the sale of the latest laptop - Chromebook 11 - after several customers complained about the overheating of the charger. As a safety measure, Google has issued a statement asking Chromebook users to use micro USB chargers instead of the designated ones for the interim period.

Chromebook 11 was released a month back and was competitively priced at $279, which helped it to record incremental sales. Reportedly, the device was the fourth best-seller in the laptop category on Amazon.com ( AMZN ). Chromebook 11 was also sold through Best Buy Co. ( BBY ), the Google Play Store and other select outlets.

Notably, the current overheating of the chargers is not a one off incident as other computer makers such as Apple, Dell, Lenovo and Fujitsu Ltd. have also faced these issues in the past.

Now, this debacle is likely to hit the sales of the device unless the manufacturer comes up with a speedy and convenient solution. Replacing the chargers is also an option, though it could be costly for the company. Moreover, other hardware makers such as Toshiba, Acer Inc. and Lenovo have announced Chromebook devices which could possibly dent H-P's share.

As such, H-P is still reeling under pressure from the declining PC business. The company has been trying hard to shift its focus from its PC-centric business to the high-margin server, storage, cloud computing and analytics business. We believe that these segments will help the company grow in the ensuing quarters.

Nonetheless, a sluggish macroeconomic environment and stiff competition from other technology bellwethers such as IBM and Salesforce.com make it even more difficult for H-P to gain market share in the cloud and security space.

Currently, H-P has a Zacks Rank #3 (Hold).



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