HP Sees Revenue, Profit Pressures as Breakup Nears

By Jeffrey Burt  |  Posted 2015-08-21 Print this article Print
HP Breakup Nearing

He also said he was optimistic about HP's chances in the space.

"The market to me at the moment reminds me a little bit of the market in 2013," Weisler said. "It really requires a highly disciplined approach to market segmentation, cost optimization, leveraging the 160,000 channel partners that we have around the globe. … We remain disciplined about not chasing share for share's sake, playing where we choose to play and winning in those segments. We are in a consolidating market, and inside that consolidating market, we are growing faster than the market. If we do that in a very disciplined way, we still see opportunity in the longer term for the Personal Systems business."

That will have to be done as a new company. As of Aug. 1, HP has been operating as two separate organizations, when officials split the company's operations and IT systems, according to Whitman. The company was able to separate almost 750 systems that impacted 95 percent of HP's businesses, and there were no problems, she said.

"This was an incredibly complex process," Whitman said. "This separation required working directly with more than 3,500 customers and partners to prepare for the cutover. … After shutting down for just three days to transition, critical operational systems across our business segments are now live globally. Customer orders are flowing through manufacturing, and shipments are in transit across our entire supply chain network. This was a huge accomplishment."

However, charges associated with the separation cost HP $401 million in the third quarter, and more charges are on the way, according to Cathie Lesjak, executive vice president and CFO.

TBR's Belanger said one of HP's problems in the quarter was its inability to cut expenses enough to offset revenue declines; the separation effort was part of that.

"HP's 2Q15 expense structure was pressured by its pending corporate split, as the vendor invests in its portfolio and sales strategies to accommodate changes in the data center and computing devices markets," he wrote.


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