China's Demand for IBM and Cisco Drops

November 25 news, according to foreign media reports, China's demand for IT giants IBM and Cisco's rapid decline in product demand is beginning to make HP's investors feel scared. As investors expect the decline in demand in emerging markets, especially the declining demand in the Chinese market, it will crush the hope that HP will resume growth in 2014 or later years. Hewlett-Packard shares last week ended a year-long upward trend.

Cisco has issued a warning that the Chinese market's demand for its products has declined. IBM reported last month that its sales in the Chinese market have fallen by 20%. Sales of Cisco and IBM in other emerging markets have also declined. However, the news that the sales of these two companies in the Chinese market declined is particularly noticeable.

HP is already struggling to cope with the expected slowdown in US federal government spending, reduced PC demand, and competition from Lenovo and Dell. Therefore, HP cannot afford to surpass the expected decline in the Chinese market. The Chinese market accounts for one-fifth of HP's total revenue and is one of HP's most important growth markets.

Investors expect Hewlett-Packard to disclose HP's operations in China when it releases its quarterly earnings report on Tuesday.

Peter Tuz, president of Chase Investment Advisors in Virginia, said that all technology giants now have some risks. People have to worry about whether other companies report the same thing in their fourth quarter earnings.

HP stocks have risen 77% so far this year. Cisco’s share price has fallen by nearly 5% since Cisco disclosed last week that Snowden’s disclosure of its operations had caused the US surveillance scandal to decline.

Analysts pointed out that the policy signal that Chinese state-owned companies await the new government is also one of the reasons for the decline in spending.

The weak market demand in China will bring new obstacles to HP’s efforts to reverse the decline in revenue for several years. HP CEO Whitman told investors last month that she expects HP's revenue to stabilize in 2014 and that certain areas will grow. Then, HP's business will accelerate growth in 2015.

According to a survey by Thomson Reuters, Wall Street analysts forecast that HP’s profit for the fourth quarter of the fiscal year was US$1 per share, with revenues of US$27.9 billion, down 7% year-on-year.