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HP will focus on growth, efficiency in 2006

HP will focus on growth, efficiency in 2006

Hewlett-Packard's main focus as the company heads into 2006 will be on growing its operations and making all segments of its hardware, software and services business more efficient. HP is strong in developing innovative technology, but has tripped up in its sales efforts due to overly complicated internal reporting structures, according to the head of the company.

HP customers have found the company "really tough to do business with," Mark Hurd, HP president and chief executive officer, told attendees at the vendor's securities analyst meeting in New York on Tuesday.

HP sales people were often slow to get back to customers because the company's reporting structure was complex meaning decision making took time, according to Hurd. "We're going to push more accountability and responsibility down deeper into the sales force," he says. "We'll take every piece of complexity off [sales] people's backs so they can increase their selling time."

When he came on board HP in March, Hurd saw a company with "a mixed report card," he says. "Not everything was good, nor was everything bad."

On the plus side were HP's technology expertise, a strong balance sheet and a mostly motivated staff, he says. Contrary to popular belief, HP was awash in information about its operations and its customers, but that data wasn't well consolidated, according to Hurd.

The aim for HP as the company restructures is to lower its costs by several major consolidation efforts around its IT infrastructure. The company will work to cut the number of its data centres as well as merge its data marts into a single enterprise-wide data warehouse, Hurd says. HP also currently has more than 100 IT sites spread across 53 countries. Hurd's aim is to reduce that number to around 25 core IT sites. He also hopes to more than halve the number of active IT projects HP is working on from 1,240 to about 500 projects.

In July, Hurd embarked on a major restructuring effort at HP involving laying off 15,300 staff with resulting annual savings estimated at US$1.9 billion. The best way to look at that effort is as the start of an ongoing process to decrease costs at HP, not as a one-time action, Hurd says.

Hurd intends to grow HP's business by leveraging the company's existing product portfolio and entering into new and adjacent markets through the internal technology development or in partnership with a third party or via acquisition. In terms of acquisitions, the company will stick to the same kind of smaller, more focused purchases it has made this year, he says.

The aim behind everything the company does going forward is "to establish HP as the world's leading IT company," Hurd says. "We've got a lot to do to get the company where we want it to be." Hurd estimates that HP sold more than 50 million printers, 30 million PCs and more than 2 million industry-standard servers in 2005.

He stresses the importance of HP's PC business. "I believe the PC business brings leverage to HP," he says. Hurd defines that leverage in terms of customers who want to buy all their IT hardware from the company including desktops, the ability for HP to partner with more third parties and to provide flexibility in its supply chain.

He also talked up two other areas of the company's business. "Software and storage are both integral parts of what we want to do going forward," Hurd says.

Hurd concluded the event on a bullish note. "You may not always like what we say, but we'll do what we say," he says. "We'll work extremely hard to deliver on commitments we make [both within the company and outside of it.]"


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