Menu
Hurd says HP's cost structure still too high

Hurd says HP's cost structure still too high

Hewlett-Packard CEO Mark Hurd said Monday the technology company's cost structure is still too high, despite the strong profitability

Despite the turnaround Mark Hurd has engineered at Hewlett-Packard, the president, chairman and chief executive officer of the technology giant remains unsatisfied.

Hurd said at a Morgan Stanley Technology Conference on Monday in San Francisco that the company still has to reduce its cost structure in order to be more profitable and grow.

By many measures, HP is successful. It edged past rival IBM in 2006 revenue, US$91.7 billion to IBM's US$91.42 billion, improved its net income by 158 percent over 2005 to US$6.2 billion, and is the industry leader in personal computer and blade server sales.

"But on an absolute basis, we're not doing well," Hurd said.

Although HP has been on a two-year campaign of cost reduction, including employee layoffs, those savings are still not completely reflected in HP's profit and loss statement, he said.

"I don't think that we've gotten very good traction with the investment base understanding that these are efforts that require time," Hurd said. "It will take us all of the next two years to be able to take advantage of that."

In an interview before a room full of Morgan Stanley investors, Hurd said the total available worldwide market for the computers, servers, printers and information technology services HP offers is US$1.2 trillion, but that HP still doesn't cover that market effectively. He said the company needs to add to its sales force and develop more partnerships with other companies to better reach customers.

Hurd acknowledged, as he did in the company's earnings conference call Feb. 20, that HP's storage business was weak. It grew only 6 percent in HP's fiscal first quarter, which he attributed to the fact that much of its product line is tape storage, a declining business. However, sales of its EVA line of disk storage products grew 18 percent in the quarter.

As for server sales, while they grew 10 percent overall, sales of blade servers jumped 45 percent in the quarter and the Integrity line of high-end servers grew by 75 percent.

To further control costs, HP last month offered employees an early retirement opportunity and said it would change from a pension plan to a 401(k) plan, although employees currently in a pension plan will still receive their pensions.

While that is expected to trim payroll costs, Hurd said other costs such as services delivery, real estate and procurement still have to be tightened.

Hurd was one of scores of technology company executives speaking at the technology conference that runs through Wednesday.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Featured

Slideshows

Meet the leading female front runners of the Kiwi channel

Meet the leading female front runners of the Kiwi channel

Reseller News honoured the leading female front runners of the New Zealand channel at the 2018 Women in ICT Awards (WIICTA) in Auckland. The awards honoured standout individuals across seven categories, spanning Entrepreneur; Innovation; Rising Star; Shining Star; Community; Technical and Achievement.

Meet the leading female front runners of the Kiwi channel
Meet the top performing customer-centric Microsoft channel partners

Meet the top performing customer-centric Microsoft channel partners

Microsoft honoured leading partners across the channel following a year of customer innovation and market growth in New Zealand. The 2018 Microsoft Partner Awards recognised excellence within the context of the end-user, spanning a host of emerging and established providers.

Meet the top performing customer-centric Microsoft channel partners
Reseller News launches new-look Awards at 2018 Judges’ Lunch

Reseller News launches new-look Awards at 2018 Judges’ Lunch

Introducing the Reseller News Innovation Awards, launched to the channel at the 2018 Judges’ Lunch in Auckland. With more than 70 judges now part of the voting panel, the new-look awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors.

Reseller News launches new-look Awards at 2018 Judges’ Lunch
Show Comments