HP shuffles executives, keeps revenue goal steady

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December 4, 2002 (Computerworld) -- Hewlett-Packard Co. has altered its corporate structure after reaching several postmerger milestones but is making no changes to its revenue projections despite the continuing tough economic climate, CEO and Chairman Carly Fiorina said yesterday.
Speaking at HP's analyst conference here, 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 $3 billion in cost savings for fiscal 2003 as a result of the acquisition. HP had expected a total closer to $2.4 billion, Fiorina said.
"It's time to take the next step," she 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," she 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 $18.4 billion for its first fiscal quarter of 2003, with growth for the full year expected at 2% to 4%, 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. HP expects to bring its computer hardware operations back to profitability next year and projects 2% to 4% 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 of worldwide operations, will move into a new role as chief marketing officer at HP. Clarke, who was in charge of merger integration, will become executive vice president of supply chain and customer operations. McKinney will take on the role of executive vice president 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, executive vice president 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 won't meet an earlier projection of 4% to 6% 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 and Sun Microsystems Inc. to capture customers willing to invest in their technology infrastructures. In its most recent quarter, HP lost $152 million on its enterprise hardware business.
HP's PC and printing businesses received a boost during the U.S. Thanksgiving holiday, Fiorina said. "We needed it to be good," she said. "In both our imaging and printing and PC categories, where we saw the best new growth was in hot new products."
On another positive note, Fiorina voiced some hope that the U.S. could help pull the worldwide economy out of its slump. "I think the U.S. will lead us out of this," she said. "The U.S. is in many ways poised for a turn in terms of some fundamentals."
HP expects software purchases to lead the recovery in IT spending followed by storage and Intel-based server sales, she said.

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