Fiorina touts HP's leadership, gains

update The CEO opposes the notion that her company is stuck between IBM and Dell, saying that Hewlett-Packard leads in every category in which it competes.

Ina Fried Former Staff writer, CNET News
During her years at CNET News, Ina Fried changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley.
Ina Fried
4 min read
NEW YORK--Hewlett-Packard CEO Carly Fiorina on Tuesday tried to make the case to Wall Street that the company has emerged from its Compaq Computer acquisition as a technology leader, rather than a follower.

"This is not a company stuck," Fiorina said, kicking off a meeting with financial analysts. "This is a company that leads in virtually every category in which we compete."

Analysts have been looking to the meeting as a chance for the company to more clearly articulate its strategies for selling to large businesses and how it differs from rivals IBM and Dell.


What's new:
Hewlett-Packard CEO Carly Fiorina makes the case on Wall Street for HP's tech leadership and financial health.

Bottom line:
HP has been under pressure to show financial consistency and to clarify how it stands apart from rivals IBM and Dell in selling to large businesses.

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To underscore its stature, HP announced that it has recently landed $1 billion in new services business.

The company also said it plans to combine its services and high-end computing units into one "technology solutions" business, although it will continue to report those items separately as well.

In addition, HP will start detailing the financial performance of its software unit, which focuses on management applications. Fiorina said the tech giant will continue to buy smaller software companies, having already announced four deals in the past year.

"We'll continue to make acquisitions there," Fiorina said. "The acquisitions we have made...have been quite small. I would expect that to continue."

However, Fiorina said the company has no interest in buying a big services company such as Electronic Data Systems or a large consulting firm. "I am not in the market to make a big services acquisition," Fiorina said, noting that the consulting market has too much capacity and, in general, is overpriced.

HP said it has signed $1 billion in services deals with Novell, Land O'Lakes and the U.S. Postal Service in addition to a previously announced $600 million outsourcing deal with the Bank of Ireland.

The largest awards include a $135 million, 15-year contract from the Romanian National Health Insurance House and a $115 million contract from plastics maker Amcor. The U.S. Postal Service award is a $50 million, eight-year contract to upgrade systems at its Washington headquarters.

Aiming for consistency
While noting progress, Fiorina said that the company's financial performance has been hit or miss. HP missed earnings expectations in July, but was then able to turn things around in the most recent quarter, boosting sales above estimates and posting operating profits in each of its business units

HP gets organic
HP has strengthened its position
in the competition with IBM and
Sun for wins in the data center.

"We know our execution needs to be more consistent," she said.

However, Fiorina rejected the notion that the company is defined by its competitors.

"I know it is popular these days to describe HP as stuck between IBM and Dell," Fiorina said, adding that it is particularly attractive for competitors to cast HP that way. "Unfortunately, the facts don't support the thesis."

Fiorina said HP is continuing to wring costs out of its business. The company said in June that it could garner $1 billion in savings this year beyond the $3.5 billion in merger-related cost savings.

"We will overachieve that and in fact achieve ($1.2 billion)," Fiorina said.

As part of creating the reorganization, HP Services chief Ann Livermore will head the combined services and high-end computing unit, with that change expected to occur in the second half of HP's fiscal year, which started in October. Peter Blackmore, who currently heads the enterprise systems business, will be responsible for the unit's sales force.

The company is also continuing to reshuffle its sales force, with some of those selling printers and PCs to large customers being shifted to the enterprise sales force under Blackmore. Both Blackmore and Livermore will continue to report to Fiorina, HP said.

HP holds 10 percent of the world's retail shelf space, the company said, adding that that foothold will be important as it enters new markets such as consumer electronics.

"Consumers go to the retail space when they are exploring new categories," Fiorina said. As for the current holiday season, the CEO said HP is seeing strong consumer sales, echoing earlier comments by company executives.

"Our quarter is clearly on track," Fiorina said. "We've had good Christmas selling."

HP continued to say that it is comfortable with analysts' estimates for the current financial year. In the longer term, Fiorina said HP sees sustained per-share earnings growth of 20 percent a year, fueled by a technology industry that should be able to grow at twice the rate of the overall economy.

Because of projected market share gains, Fiorina said HP "ought to be able to grow at slightly above" the growth rate of overall technology spending.

Reuters contributed to this report.