HP shows recovery following PC flip-flop fallout

Besides the flip-flop over PCs, Palo Alto, Calif.-based HP has struggled with internal management problems, including a complex supply chain that reduces efficiency. Gartner said HP’s growth in the first quarter suggests that those internal issues were resolved, though Whitman has described the turnaround as a multiyear effort. Last month, HP announced plans to combine its PC and printers divisions to cut costs and improve operations.

The latest PC numbers also suggest that manufacturers have mitigated supply constraints in hard storage drives caused by heavy flooding at manufacturing centers in Thailand last fall.

Gartner said there were moderate problems in selected markets, such as low-end consumer laptops, but “low PC demand was able to mask the tight (hard drive) supply overall.” IDC said larger PC makers such as HP and Dell succeeded in managing inventory and absorbing price increases in the parts caused by supply shortages.

Despite the gains, HP and other PC makers still face a broader challenge from the growing demand for mobile devices. In the U.S. and other developed markets, consumers have been delaying PC replacements and buying the latest phones and tablet computers from Apple Inc. and others instead.

Late Wednesday, Gartner said worldwide shipments of PCs increased 1.9 percent in the first quarter, compared with its earlier expectations of 1.2 percent. IDC said shipments were up 2.3 percent, better than a projected decline earlier of 0.9 percent.

But those gains were small compared with the double-digit percentage growth PC makers enjoyed before the tablet boom.

IDC expects PC shipments will pick up late in the year as Microsoft Corp. releases a new version of its Windows operating system, one that is designed for both PCs and tablets. That will make it easier for PC makers to build machines that have the versatility of PCs and the slim designs and longer battery life of tablets. Still, IDC expects growth in PC shipments for the full year to be a modest 5 percent.

HP’s stock rose $1.69, or 7.2 percent, to close at $25.10, though it’s still at the low end of its 52-week range of $21.50 to $41.74. Dell’s stock gained 1 cent to $16.26.

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