HP READY TO RE-BOOT
HP READY TO RE-BOOT
2005-04-05 at 12:03:00 pm #29084
hp ready to
re-bootH-P sets focus on growth and
operational problemsPALO ALTO, Calif. — In his first public appearance as
Hewlett-Packard’s new CEO, Mark Hurd said Wednesday that he will concentrate
first on fixing H-P’s operational problems — not breaking H-P up.
“My initial focus will be on improving operations … and
driving profitable growth,” he said at a news conference.
Hurd, 48, was hired Tuesday to replace Carly Fiorina,
ousted in February. H-P is profitable but so vulnerable to attacks from rivals
Dell and IBM that some shareholders are calling for structural changes.
The former CEO of NCR did not dismiss the possibility of
spinning off divisions, nor did he discount the likelihood of layoffs. But his
plans were vague. “Clearly the company is not performing to its potential,” he
said. “But I’m not at all concerned about the past. I’m only concerned about the
Tech analysts say Hurd must consider big changes,
•Streamlining. H-P’s merger with Compaq Computer,
which Fiorina spearheaded, has left it bloated. It has 150,000 employees and two
huge complexes in California and Texas. It sells Compaq and H-P brand names in
retail stores, directly via phone or Web, and in partnerships with local
computer shops. “They sell too many products through too many channels,” says PC
analyst Roger Kay with researcher IDC.
•Spinning off printers. Nearly all of H-P’s profit
comes from its printer division. H-P’s stock value is roughly the worth of this
unit and its cash, meaning that Wall Street assigns no value to H-P’s other
divisions. Since these units have to be worth something, there’s been pressure
on H-P to split up. H-P has argued that it is stronger together.
•Selling the PC division. PCs are marginally
profitable at best, and all PC makers struggle to compete with lean giant Dell.
In December, IBM sold its PC division to Lenovo, a Chinese company. “H-P has to
look at the reasons why IBM did what it did,” says computer analyst Samir
Bhavnani with researcher Current Analysis.
Independent tech analyst Rob Enderle says Hurd likely will
“fine tune” H-P for three to five years, than step aside for a more visionary
leader. H-P’s powerful board had signaled that it wanted no sweeping changes,
but Chairman Patricia Dunn said Hurd would be free to tinker with H-P’s
In meetings with news media and analysts, Hurd
distinguished himself from Fiorina, who had a reputation as a flashy,
power-hungry executive. He emphasized cooperation and methodical
decision-making. “Building great companies isn’t all about the CEO,” he said.