Hewlett-Packard Co. has altered its corporate structure after reaching several post-merger milestones but is making no changes to its revenue projections despite the continuing tough economic climate, Chief Executive Officer and Chairman Carly Fiorina said Tuesday.
Speaking at HP’s analyst conference in San Francisco, Fiorina announced several changes to HP’s upper management, as the company looks to streamline its operations six months after completing its acquisition of Compaq Computer Corp. The moves come as HP is showing better than predicted performance in some areas of its business, including the expectation of US$3 billion in cost savings for fiscal year 2003 as a result of the acquisition. HP had expected a total closer to US$2.4 billion, Fiorina said.
“It’s time to take the next step,” Fiorina said.
Despite the better than expected cost reductions, Fiorina bucked some speculation that she would raise HP’s fiscal guidance for 2003.
“I am not here to raise guidance today,” Fiorina said. “The reason we are not going to raise guidance today is because the economy continues to be uncertain, and we want to make sure we are not getting ahead of ourselves.”
HP expects to post revenue of close to US$18.4 billion for its first fiscal quarter of 2003, with growth for the full year expected at 2 per cent to 4 per cent, she said.
The company has shown improved performance in its print and imaging businesses following the Compaq acquisition, helping it to offset losses in its PC and server businesses. It expects to bring its computer hardware operations back to profitability next year, and projects 2 per cent to 4 per cent growth in overall IT spending in 2003, Fiorina said.
To help meet its goals, HP will alter the roles of Executive Vice-Presidents Mike Winkler, Jeff Clarke, and Webb McKinney.
Winkler, former executive vice-president (EVP) of worldwide operations, will move into a new role as chief marketing officer at HP. Clarke, the EVP in charge of merger integration, will now become EVP of supply chain and customer operations. McKinney will take on the role of EVP overseeing merger integration and organizational effectiveness, expanding his merger-related role to oversee company governance.
In addition, HP is looking to bridge its short-term and long-term technology strategies by giving Shane Robison, EVP and chief technology officer, more responsibility in overseeing the running of HP Labs.
HP hopes to squeeze more revenue out of its Enterprise Systems Group, although it probably will not meet an earlier projection of 4 per cent to 6 per cent growth for the year for that division, Fiorina said. However, she pledged that the group, which sells servers, storage equipment and software, will be profitable by next year.
“We are not hoping that business is profitable in (2003); we are committing to profitability in (2003),” she said.
HP is locked in a battle with Dell Computer Corp., IBM Corp. and Sun Microsystems Inc. to capture customers willing to invest in their technology infrastructure. In its most recent quarter, HP lost US$152 million on its enterprise hardware business.
