HP CEO Whitman Keeps Calm, Carries On - It's surprising HP survives while Digital Equipment Corp (DEC) did not!!!!

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HP CEO Whitman Keeps Calm, Carries On

Hewlett-Packard's second quarter sees big sales declines, but profits
exceed forecast and CEO Whitman says problems are under control.

http://www.informationweek.com/hardware/windows-servers/hp-ceo-whitman-keeps-calm-carries-on/240155456?cid=nl_IW_daily_2013-05-23_html&elq=6c13e68251294f59b6de9ef51eb55a2e
Doug Henschen | May 23, 2013 09:24 AM

HP had few positive figures to report during a conference call with
financial analysts on Wednesday, but one key figure, non-GAAP
earnings, rose 11%. The 87 cents earned per share exceeded the high
end of HP's 80- to 82-cent forecast and was a sign that the company's
"fix and rebuild" plan is working, said CEO Meg Whitman.
Whitman sounded comfortable, at ease and in control. She said the
company's performance is much more predictable than it was last year,
the first year of her tenure at HP. In another sign that financial
stability is returning, the company reported a 44% increase in cash
flow to $3.6 billion, up from $2.5 billion in 2012.

Most other numbers were not as good. Net quarterly revenue declined
10% to $27.6 billion from $30.7 billion in the same quarter last year,
according to generally accepted accounting principles (GAAP). Net GAAP
earnings declined 32% year-over-year to $1.1 billion. GAAP operating
margins dropped 1.4 percentage points from the year-earlier quarter to
5.8%.

In results by business unit, HP's Personal Systems revenue was down
20% from last year, with Windows 8 failing to lift PC sales,
particularly in the consumer segment, which was down 29%. Enterprise
Group revenue was down 10%, with a 12% decline in industry standard
server sales and a 13% drop in storage revenue. HP's Enterprise
Services business was down 8%. Software revenue was down 3%, with a
23% drop in new license revenue.

[ Want more on HP's embrace of Android? Read HP Slate Android Tablet:
Pros And Cons. ]

The slogan "Keep Calm And Carry On" comes to mind. It was posted
around London when all hell was breaking loose during the Battle of
Britain. HP is restructuring amid a shift away from PCs, an enterprise
move toward cloud computing and new types of servers and plenty of
unfavorable macroeconomic trends. Whitman is HP's Churchill, saying
"we shall never surrender the PC business; we will fight to compete
profitably in servers, networking, storage, software and services."

Whitman pointed to bright spots including a 1% increase in networking
revenue, a 1% increase in printing revenue and robust gains with new
products including Moonshot low-power servers, 3Par midrange storage
systems and HP software-defined network (SDN) products. She also
detailed progress on efforts to control costs, like the restructuring
program that will see 26,000 employees exit the company by the end of
this year.

But HP isn't just cutting its way to earnings-per-share targets, she
insisted. It's also "protecting its investment in HP's future. You can
see that investment in products like Moonshot, multi-function
printers, OfficeJet ProX, SDN, low-tier and mid-tier storage and
strategic enterprise services," she said.

HP's competitors aren't making a return to profitability any easier.
"This quarter you saw Dell completely crater their earnings," Whitman
said of that company's 79% drop in profits last week -- clearly
grabbing for market share as it's poised to go private. "Maybe that's
what you do when you're going private, but it is not what you do if
you're running a big, publicly held company that is trying to create
the financial capacity to invest in innovation."

HP has been getting aggressive on the consumer front, introducing
Android-based tablets to counter the slide in PC sales. "Having
Android products helps a lot," Whitman said. "The $169 Slate 7 covers
a segment of the market that we didn't have before."

In other segments HP is walking away from some deals, Whitman said,
but she noted that the company is redoubling its efforts to be more
competitive, with responsive pricing and products that are
"appropriately featured rather than over featured." HP's multi-year
makeover will require ongoing assessment of margin versus market
share, she said.

"We're going to be focused on the deals that are sticky as opposed to
the deals that are transactional [with] no long-term relationship,"
she said.

"Meg has done an excellent job executing in what has been a difficult
environment," Bill Kreher, an analyst at Edward Jones & Co., told
Bloomberg. "The Street is giving them a pass on this year and perhaps
even into next. But the market would like to see a return to growth in
2014."

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