HP:U.S.A. SALES,NOT ALL GOOD ,NOT ALL BAD ,'SAYS CEO

[Anonymous]

http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1211334910274400.xml&coll=7
HP’s US sales ‘not all bad, not all good,’ says CEO
HP’s global sales offset flat U.S. ones
High tech – The boost might not be enough as Hewlett-Packard prepares to digest EDS
May
, 2008 Hewlett-Packard Co. cashed in on rising international demand in
its second quarter, but that performance may not be enough to ease
worries about HP’s exposure to the ailing U.S. economy as it prepares
to digest the second largest acquisition in its 69-year history.The
results released Tuesday came as no surprise because HP provided a
snapshot of its latest quarterly numbers and outlook last week when the
Palo Alto, Calif.-based company jolted investors with the news it would
buy technology services provider Electronic Data Systems Corp. for
$13.2 billion.The deal has raised concerns that Plano, Texas-based EDS
will compound the headaches that HP may be facing if U.S. demand for
its personal computers, printers and other products and services
remains flat or slumps as consumers struggle with high gas and food
costs.Among other challenges, HP probably will have to make substantial
layoffs from a combined work force of 210,000 employees while trying to
blend two corporate cultures after the EDS deal closes late this year.

Layoffs in NW expected
In
the Northwest, HP has big campuses related to its printer business in
Corvallis, Vancouver and Boise, and it recently told employees it would
cut back its printer operations at all three. Workers expect hundreds
of job cuts, but the company hasn’t provided details.HP is counting on
EDS to boost the demand for its services and computers among major
companies and government agencies while improving its competitive
position against IBM Corp., the leading seller of technology
services.EDS also has Oregon ties, by way of its $420 million purchase
last fall of Saber Corp. The software company, operating as an EDS
subsidiary from its Portland headquarters, contracts with state
governments for software that helps run a wide variety of state
services, including vehicle registration, driver’s licenses, voter
registration and unemployment services.Echoing remarks from a week ago,
Chief Executive Officer Mark Hurd, assured reporters Tuesday that the
acquisition will pay off.”Make no mistake about it: We will get the
cost right and we will create value for shareholders,” he said during a
conference call. In a separate call with analysts, Hurd acknowledged
the difficulty facing HP in the United States, where the company’s
second-quarter sales were unchanged from a year ago.”The best thing
that I can tell you about the U.S. is that it’s a very spotty market,
and we try to maintain caution around it.”

Diversity saves revenue
Like
several other large technology companies, HP’s international diversity
is helping to offset the debilitating effects of the weak U.S. economy.
Markets outside the United States accounted for 70 percent of HP’s
revenue in the second quarter.The strong international demand, fueled
in part by the weak U.S. dollar, propelled an 11 percent increase in
HP’s second-quarter revenue, which totaled $28.3 billion. If currencies
had remained stable, HP said its revenue would have been up by 5
percent.HP fared particularly well in the rapidly growing economies of
China, India, Russia and Brazil, where its sales climbed 26 percent
from last year.The company also was helped by strong worldwide sales of
notebook computers, which climbed 31 percent from last year. Sales of
desktop computers remained flat, a trend that Hurd attributed to rising
consumer demand for more portable devices that can access the Internet
over wireless networks.In the quarter ended April 30, HP earned $2.06
billion, or 80 cents a share, a 16 percent increase from $1.76 billion,
or 65 cents, in the year-ago period.HP also reiterated the improved
outlook it gave a week ago. But the solid second-quarter performance
and upbeat forecast for the rest of the year haven’t been enough to
fully restore the erosion in HP’s stock price since news of the EDS
deal leaked out. HP shares are down about 6 percent since then.In
Tuesday’s trading, HP fell 25 cents to $46.46, then shed another 31
cents, or 0.7 percent, in extended trading.

[Author]

May 22, 2008 at 3:02 PM