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HP Gives Wall Street A Performance Overview

In a wide-ranging presentation in front of Wall Street analysts on Dec. 12, Hewlett-Packard’s CEO Mark Hurd and executives from the company’s various segments each emphatically stated that while progress has been made, more financial fat can and needs to be cut.

No direct mention was made of layoffs — HP cut 10 percent of its workforce last year — but facilities consolidation and the re-engineering staffing priorities were brought up.

Hurd said half of HP’s employees work in support roles while the other 50 percent handle innovation and product development. With the help of new technology coming online that will automate many support functions, Hurd wants the support figure reduced to 20 percent. The company is also consolidating its data centers, reducing the number of products to 500 from 1,200 and replacing aging back-office equipment.

After going over the company’s weak spots, Hurd pointed out the improvements HP has made during his tenure. He said financial results are now consistent with better shareholder return. This was accomplished by improving margins across the company’s product lines, general cost discipline and a better cash flow. Hurd said employee morale has improved and the workers are better-aligned to increase performance.

He also cited changes made on the customer service front that included reducing the number of layers between the company and the customer to ensure a better experience, whether they are a major corporation or a retail-level consumer.

Todd Bradley, executive VP of HP’s personal systems group, said his group will continue to aggressively price its PCs, increase the attach rate of services and products to each sale, expand the company’s retail footprint and simplify the method HP and consumers create relationships. All while driving costs out of the business with better operational practices so the money saved can be used to fuel growth, he said.

Vyomesh Joshi, executive VP of HP’s imaging and printing group, had the best news to report, stating 2006 was a good year for his group with $4 billion in operating profit on the shipment of 54 million printers. Laser printer sales increased 19 percent, inkjet printers were up 10 percent and supply sales were also up 10 percent, he said.

Going forward, the group, which is responsible for consumer and business imaging and printing devices, will place more emphasis on building out printing infrastructures with retailers so they can offer printing solutions to consumers. He said this is where the growth lies, despite the fact that more people than ever print images in their home.

Despite the success Joshi’s group has enjoyed, he too stressed the need to cut costs and take advantage of new profit opportunities as they arise.