Recent trends in revenue growth, unit shipments and operating margin point to HPQ overtaking DELL in the battle for supremacy in personal systems. Barring a reversal of this trend, we think that HPQ is positioned to capture the majority of growth and eventually prime position in this important market.

Our Gridstone analysis over the past eight quarters shows that DELL’s revenue from Desktop PCs and Mobility Systems has declined 0.6% CAGR. During the same period, HPQ’s revenue from Desktop and Notebook systems has grown 7.7% CAGR (See Exhibit 1.) Most importantly, HPQ captured the majority of growth in the notebook segment, increasing revenue a whopping 21.7% CAGR – almost double DELL’s respectable 12.2% mobility growth rate. If these growth rates persist, we anticipate that HPQ will surpass DELL in notebook/mobility systems revenue during 2007.
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