After a rough couple of weeks, the Nasdaq looked poised for a strong open to the week yesterday, but eventually gave up gains. However, the index seems to have regained positive traction today, rising 1.5% in early trading. What was supposed to be a sleepy August after earnings season has turned into a raucous affair. Let's get straight to the top two tech stories from the last 24 hours.
Tech News No. 1: China surpasses the U.S.
With more than four times the population of the United States, a booming economy, and more than 485 million Internet users, it was only a matter of time before China's PC sales eclipsed that of the United States. Market researcher IDC reports that last quarter, Chinese PC shipments reached 18.5 million, while U.S. PC shipments fell to 17.7 million. Compared with last year, that's 14% growth for the Chinese market, and a 4.8% decline in the American market.
Those shipments also translated into higher sales totals. The value of shipments to China was $11.9 billion, edging a bit ahead of the $11.7 billion worth of PC shipments to the U.S. While there's little in the way to profit directly from buying PC makers -- China's PC market is fiercely competitive and margins are anemic -- a couple of companies profiting from Chinese PC growth are flying under the radar:
The extreme popularity of online RPGs in China is a key factor in helping drive surprisingly high graphics-processor adoption rates, and the newest crop of online games is pushing the graphical envelope in new ways. Older "2.5D" titles are showing their age, but a group of new RPGs like Changyou's
That's not to say NVIDIA's graphics processor business will be a growth monster -- the segment was still flat from last month. However, trading at just 13 times earnings, with 35% of its market cap sitting in the bank, NVIDIA's graphics processing segment isn't exactly priced to drive much growth, either.
Tech News No. 2: Oracle eyes... HP?
It almost feels inevitable, doesn't it? Hewlett-Packard
For one, Oracle would have little interest in the HP's PC and printing business. That could be among the easier problems to fix, as HP is already planning on spinning off its PC line. That would leave HP's server, services, and software units, which contribute a combined $8.8 billion in operating profit per year. If that could be folded into Oracle, it'd be a nice boost as the company commands $12.7 billion in operating profit itself.
Oracle has about $13 billion in net cash -- and $29 billion total -- so the deal would involve a fair bit of leverage. Even after its precipitous fall, HP is still worth more than $50 billion. Also, there's the allure of building up a better services and software division to compete against IBM
Even worse, while HP signaled a change in direction with its $10 billion acquisition of Autonomy, news that trickled out in subsequent days points to a company that was looking for any software suitor it could find; HP had previously approached both Tibco and Teradata
So while it might excite the tech world to think about the possibilities of an Oracle and HP tie-up, don't get your hopes up that HP will be Larry's next megatarget.
To stay updated on the Oracle and HP situation, or NVIDIA and Intel's fortunes in the booming Chinese market, make sure to add any of the above companies to our new My Watchlist feature. It's absolutely free and delivers up-to-date news and analysis on all your favorite companies:
Eric Bleeker owns shares of NVIDIA. You can follow him on Twitter to see all of his technology and market commentary. The Motley Fool owns shares of Oracle and IBM. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel, NVIDIA, Teradata, and Tibco Software; creating a diagonal call position in Intel; and writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.