*NEWS*CAN THIS REALLY BE HEWLETT-PACKARD?

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*NEWS*CAN THIS REALLY BE HEWLETT-PACKARD?

 user 2005-12-12 at 9:51:00 am Views: 67
  • #13654

    Can This Really Be Hewlett-Packard?
    It’s running on all cylinders thanks to shrewd refocusing and cost-cutting under CEO Hurd
    For
    years, Hewlett-Packard Co. seemed locked into the role of computerdom’s
    least likely to succeed. Caught in a no-man’s land between
    hyperefficient Dell Inc.  and technology powerhouse IBM, HP became
    known mostly for epic earnings misses, a controversial merger with
    Compaq Computer Corp. , and acrimony among employees and investors
    during the stormy reign of Chief Executive Carleton S. Fiorina.
    Funny
    how a 40% rise in the stock price can change the mood. That’s how much
    HP’s stock has risen since April, when Mark V. Hurd moved from NCR
    Corp.  to take control of the Silicon Valley giant. Since then, HP has
    grabbed share in key markets such as PCS and storage gear, and shown
    crisp execution reminiscent of its glory days. In its most recent
    quarter, ended Oct. 31, HP beat Wall Street’s expectations by 12%.
    The
    most hopeful news for investors may be that all of the company’s
    businesses are now profitable, after years in which its $25 billion
    printer business covered losses at the rest of the $87 billion company.
    The surprise tale of the ticker: HP shares no longer trade at a big
    discount to IBM and Dell, whose shares have fallen 1% and 17%,
    respectively, since Hurd took charge.
    How did Hurd get off to such a
    fast start? Cost-cutting, in particular a 10% reduction of the
    workforce in August, has helped. But Hurd has brought operational focus
    to initiatives begun by the marketing-oriented Fiorina. For example, he
    arrived just in time to reap the benefits of vastly improved product
    lines in laptop PCs and storage gear — two critical growth segments
    where the company has been particularly weak. Having largely integrated
    nearly a dozen acquisitions made over the past 18 months, HP’s $1
    billion software business turned a profit last quarter after years in
    the red.
    CHIP CHALLENGES
    Insiders
    are now waiting for Hurd to lay out his growth plans at a Dec. 13
    analysts’ meeting. One priority will be corporate computing. While it
    is a leading supplier of bare-bones servers, HP has been trying for
    years to increase sales of higher-margin software and services. Now, it
    will focus on helping companies simplify their sprawling tech
    operations with the use of management software — even if it means
    selling less hardware in the short term as customers boost utilization
    of machines they already own. Another key initiative: selling more
    industrial-strength imaging gear to take share from large copiers and
    commercial-printing presses.
    Plenty of challenges remain. HP has
    phased out its high-end server chip in favor of Intel’s troubled
    Itanium family of processors. Rivals point to repeated delays and
    lowered performance specs on the Intel chips. “I think HP is in
    trouble,” says Karl Freund, vice-president of IBM’s high-end server
    business. “Customers are evaluating their options.” And few analysts
    think HP can find new printer markets fast enough to compensate for
    falling demand and pricing on consumer models.
    Still, it’s a far cry
    from the dour mood of a year ago. Back then, investors, rivals, and
    even many insiders assumed HP was a sitting duck, too beset with
    internal problems to fight off nimbler rivals. Not anymore. “Mark has
    been busy getting the engine tuned,” says director George A. “Jay”
    Keyworth II. “Now, we’re turning our attention to growth again.”