Annex Newsflash 2005-16                          May 2, 2005

INDUSTRY TRENDS

Analysis of Computer Companies' CEO and Stock Performances

HP CEO's Rating Surges, Dell's Slumps

But IBM Stock Drops the Most;

Also, Lenovo Completes IBM PC Acquisition

PHOENIX, May 2 Right after we last published a Headturners story about the computer companies' CEO approval ratings, as seen by Forbes magazine readers, that showed HP's former CEO, Carly Fiorina, in the cellar (see "CEO Approval Ratings," Feb 2005), she got canned by the Board.  Ever since, the HP CEO approval ratings have been surging (see the chart).

So now HP has moved up from dead last to second best - second to only Apple's Steve Jobs, whose job performance the Forbes readers seem to admire the most.  Nearly as steeply as HP CEO's ratings went up, Dell CEO's have dropped.  Now Dell's Kevin Rollins is holding up the rear, eclipsed even by the lowly Sun.

But some words of caution are in order.  In Forbes' own words, "the CEO Approval Tracker is not a scientific poll and only reflects the opinions of those users who choose to participate."  Furthermore, "technically adept users may be able to vote multiple times," Forbes admits.  So the survey results have to be taken with a grain of salt.  Nevertheless, one can still derive some qualitative value from the Forbes findings, such as whose image is up and whose is down.

Wall Street investors, however, have not been so kind, either to HP or to any other computer companies.  Their stock prices have been dropping in the last two months, ranging from 7% for HP, to a 16% decline for IBM.

Lenovo Completes IBM PC Acquisition

PHOENIX, May 2 - Chinese computer maker Lenovo has completed its $1.75 billion purchase of IBM's personal computer division, creating the world's third-largest PC maker, the company said on Sunday.  The deal - one of the biggest foreign acquisitions ever by a Chinese company - is expected to quadruple sales of Lenovo Group Ltd. to about $13 billion.

The deal closed a couple of months earlier than expected.  

"We are proceeding to open our doors at the end of the second quarter," said a jubilant Steve Ward, an IBM senior vice president who heads up the PC unit, in a teleconference with analysts that followed the March 10 U.S. government announcement of its stamp of approval.  Ward is the CEO of "new" Lenovo (see "Good Riddance, Finally?," Dec 2004).

"Within weeks, we will be introducing new products as the new Lenovo," Ward also said in a May 1 company statement without providing specifics, echoing his earlier comments (see "
IBM PC Deal Okayed," Mar 10, 2005).

Lenovo Chairman Yang Yuanqing called the purchase of International Business Machines Corp.'s personal computer division an "historic event" for the company.

The company also confirmed weeks of media speculation that it was raising extra cash for the massive deal, the Associated Press reported. It said three private equity investment firms - Texas Pacific Group, General Atlantic Group and Newbridge Capital Group - have agreed to take a $350 million stake in the company.  

Happy bargain hunting!

Bob Djurdjevic

For additional Annex Research reports, check out... 

2005 IT: HP Surges, Dell Slumps; Lenovo Completes IBM Deal (May 2005); Capgemini Jettisons Healthcare in N.A. (Apr 2005); HP: From India to Poland (Apr 2005); IBM: Slammed and Dunked (Apr 2005); Accenture: Roaring Ahead (Apr 2005);  Fujitsu Unveils New Servers (Mar 2005);  EDS Executive Suite; HP's New CEO (Mar 2005);  An iSeries Revival (Mar 2005);  EDS Booster Club Fees Rise (Mar 2005);  An Upside-Down View (Mar 2005);  The Worst of Both Worlds (Mar 2005);   Octathlon 2005: Accenture Wins (Mar 2005);  IBM Global Services: Smaller, Shorter - Better? (Mar 2005);  IBM 5-yr Forecast: Quality over Quantity (Mar 2005); IBM PC Deal Okayed (Mar 10, 2005) Rumor Lifts EDS', Fujitsu's Shares (Mar 2005); Capgemini: Turning the Corner (Feb 2005);  IBM Servers to Grow Again (Feb 2005);  Carly's Fickle Fans (Feb 2005);  CSC: Gearing Down on Purpose (Feb 2005);  EDS: Grossly Overpriced Stock (Feb 2005);  IBM Historical Update: 2004 Shot in the Arm (Feb 2005); New HeadTurners Series #1 (Feb 2005); IBM: A Crescendo Finale! (Jan 2005); Accenture: Strong Finish, Better Start (Jan 2005); Annex Coverage 2004: IT Services Dominate (Jan 2005)

2004 IT: EDS: The Titanium Stock (and other Wall Street tales) (Dec 2004); IBM PC: Good Riddance (Dec 2004); Fujitsu: Recovery Continues (Nov 2004);  IBM Server Renaissance (Nov 2004);  HP Hits Home Run (Nov 2004); Capgemini: Revenue, Stock Soars (Nov 2004); EDS: Jordan's Swan Song? (Nov 2004);  To Russia with Love and $ (Oct 2004); IBM: Slow Quarter No Longer (Oct 2004); Accenture: Revenues, Profits Up, Stock Down (Oct 2004); Capgemini: A Takeover Target? (Oct 2004); Sellout of America (Oct 2004); Spy Wars (Sep 2004); Outsourcing Boomerang (Sep 2004); EDS to Cut Up to 20,000 More Jobs (Sep 2004); Capgemini Stock Plummets on Unexpected Loss (Sep 2004); HP Savaged by Wall Street (Aug 2004); Moody's Lowers the Boon on EDS (July 2004); HP: Delivering Value Horizontally (June 2004); Accenture: Revving Up a Notch (June 2004); Beware Your CFO! (May 2004)IBM: Changing of the Guard (May 2004); Capgemini: Texas-size Home Run (May 2004); Following the Money (May 2004);  EDS: On a Wink and a Prayer (Apr 2004); HPS Wins by a Nose! (Octathlon 2004); Accenture: Burning the Track (Mar 2004);  IGS: "Crown Jewel" Restored? (Mar 2004); HP: Still No Cigar (Feb 2004); Cap Gemini: Another, Smaller Loss (Feb 2004); CSC: Good Quarter Gets Boos (Feb 2004); EDS: "Hot Air Jordan" Flaunts Flop as Feat (Feb 2004); IT Industry: Whither Goeth It? (Jan 2004); Cronyism Is Alive and Well at EDS" (Jan 2004)

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Volume XXI, Annex Newsflash 2005-16
May 2, 2005

Bob Djurdjevic, Editor
(c) Copyright 2005 by Annex Research, Inc. All rights reserved.
e-mail: annex@djurdjevic.com

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