Fiorina: Dell has Zero Impact on HPs Trajectory

 
 
By Don E. Sears  |  Posted 2003-12-09 Email Print this article Print
 
 
 
 
 
 
 

Prediciting slow enterprise growth in 2004, Hewlett-Packard's CEO Carly Fiorina on Tuesday said the company was well-positioned thanks to its consumer and small-business product lines.

In a briefing with analysts on Tuesday, Hewlett-Packard Co. Chairman and Chief Executive Officer Carly Fiorina offered a financial forecast for the next year and a look at its competitive challenges. Expecting slow enterprise growth in 2004, she said the company was well-positioned thanks to its extensive consumer and small-business product lines. Fiorina characterized enterprise growth in next year as "the slowest-growing segment of the market, with 2004 IT budgets increasing 1 to 2 percent." "CIOs are operating under permanent caution, with excess capacity still existing in IT spend," Fiorina said, though she did see some sentiment improving towards IT projects that have been on hold due to the economy and budget freezes. Overall, she forecast the 2004 enterprise market as "relatively low growth, relatively slow burn with long sales cycles."
Fiorina went on to state that Hewlett-Packard has "emerged as a clear leader in global IT" placing either number one or two in market share in the categories it chooses to compete.
According to International Data Corp. market share data provided by HP, in the third-quarter of 2003, the company held the top position in nine hardware categories, including notebooks, disk storage, storage area networks, management software, and Linux, Unix and Windows servers, as well as laserjet and inkjet printers. The company held the number two spot for desktop sales. Meanwhile, HP Executive Vice President Ann Livermore pointed to the companys position in the professional and consulting services market in the briefing. She said the company measured a 9 percent sequential increase in revenue from services during the fourth quarter of 2003. Responding to questions about competitors Dell Inc. and IBM Corp., Fiorina had a fair amount to say.
On IBM, Fiorina said that "IBMs vertical model is consistently expensive to own and expensive to maintain. Their managed services are under attack; their mainframe is under attack." She concluded that IBMs expansion strategy into Linux and networked storage categories were catch-up plays. When asked specifically whether she viewed Dell as a threat to HPs business, Fiorina said, "Frankly, they [Dell] have had zero impact on the trajectory of our growth... Dell is trapped in the PC business with roughly 80 percent of its core business there, and 70 percent of that is in the same geography." Fiorina added: "Dell is trapped in a business and is trying to expand" and is seeing lots of competition in those areas. "Its all about relative performance... and outgrowing the market. We dont consider Dell a threat." In the briefing, the Palo Alto, Calif.-based Hewlett-Packard reported earnings growth of 47 percent from fiscal year 2002 to 2003 with a moderate 1 percent year-over-year increase in revenue for the same period. Executive Vice President and Chief Financial Officer Robert Wayman forecast 6 percent revenue growth on $77.3 billion revenues for fiscal year 2004, up from $73.1 billion for fiscal 2002. He also forecasted earnings to increase 23 percent for 2004. Reiterating comments from the companys quarterly report in November, Fiorina said HP saw the greatest growth in 2003 from its consumer and small-to-medium business product lines. The leading lines of business for HP were digital imaging and its PC businesses. To read more of HPs financial results reported in November, click here. One major development during the analyst session included a major restructuring announcement from Fiorina. HP was merging its consulting and professional services division and enterprise systems group into a single unit. The new division will be called the Technology Solutions Group. Click here, to find more information on HPs enterprise restructuring including an analysis of the decision.
 
 
 
 
 
 
 
 
 
 
 

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