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HP's Platt: PC era not over

Hewlett Packard's chief executive scoffs at the idea that the PC era is ending and also says that the new CEO search may be completed by the end of June.

NEW YORK--Although pricing pressure, especially on the corporate personal computer front, has hit Hewlett Packard's revenues from PC sales hard, the company is on plan to report profits, HP's chief executive Lewis Platt said today.

Platt, who was in New York to introduce HP's new midrange computing servers, also told a small group of reporters that the company enlisted an executive search firm about two weeks ago and hopes to have chosen a new CEO to replace Platt by the end of June.

HP has indeed felt the heat from falling Average Selling Prices for corporate PCs but is well on its way to making money from that sector, Platt said. He took issue with warnings by Compaq Computer of weak PC demand and scoffed at IBM Chairman Lou Gerstner's widely quoted view that the PC era is over.

"The PC era is over?" Platt said. "I don't think so."

"Well, maybe for them," Platt said sardonically, referring to IBM, which recently disclosed losses of nearly $1 billion on its 1998 PC sales of around $12 billion.

Platt was seemingly less gung-ho about about the PC in December, when he called them "pretty crude."

"I'm not predicting the demise of the PC, but the PC is a pretty crude device, hard to use, and so 'general purpose' that very few of us use more than 5 percent of its capability," Platt said in December. "You'd be better off with an appliance that is cheaper, smaller, and does the special-purpose job [that you're] doing.

"You don't hear people complaining about lots of electrical appliances--I think we're headed toward that world [for digital appliances]," he said.

In New York today, Platt said: "The good news is that we are making money in each element of the PC business," said Platt, referring to the home, business, and small office market. "But the toughest market right now is the corporate desktop-- particularly when bought in large volumes."

"This is a place where Dell has become much more competitive trying to regain some of their growth," said Platt, adding that Compaq Computer and IBM are also adding heat in that market.

On Friday, Compaq Computer, the world's largest personal computer maker, said its first quarter profits would be less than half of what the Street had expected. Compaq's shares plunged as much as 23 percent yesterday on the news of the profit warning.

"We haven't seen anything like Compaq has seen," said Platt. "Our PC business is fundamentally on plan, on plan for revenue growth, on plan for profits."

Later in the day, HP clarified comments by Platt regarding double-digit revenue growth for 1999.

In a statement, Hewlett-Packard said Platt's comments pertained to worldwide unit sales for PCs, not overall revenue growth.

The company expects overall revenues to grow at a six to eight percent rate in the year, which is consistent with financial analysts' expectations.

Last month, when HP announced its plan to split off its test and measurement division into a separate company in a major reorganization, the company also announced that Platt planned to retire.

Platt said today that the company is moving fast to find a successor and hopes to wrap up the search process by the end of June. HP hired a search firm about 2 weeks ago which has already put together a shortlist of about half a dozen people who are from within as well as outside the company.

The retiring CEO said HP is in a position where its house is in order financially and needs a person with strategic vision that can add to Platt's own legacy. He added that apart from maintaining and even regaining momentum lost over the past decade, the new CEO will have plenty of opportunities to put "his or her touch" on the company.

"We are looking for someone who is [Information Technology] savvy," said Platt. "We want someone who is quite good at strategy and at getting the message out."

"I can tell you that you don't set your strategy and walk away for three years," said Platt. "It takes someone to constantly be scanning and tweaking the strategy.

"That's what it takes to win," Platt added.

Platt is one of the four member on the search committee and said that he has yet to personally interview anyone for the position.

Reuters contributed to this report.