New HP CEO Committed to $120 Billion Hardware Business

New HP CEO Meg Whitman and HP Chairman Ray Lane say they are committed to Hewlett-Packard's $120 billion hardware business.

The VAR Guy

September 23, 2011

2 Min Read
New HP CEO Committed to $120 Billion Hardware Business

I love hardware

New HP CEO Meg Whitman and HP Chairman Ray Lane say they are committed to Hewlett-Packard‘s $120 billion hardware business. Whitman and Lane made the statement to appease customer and partner concerns during an investor call today. But here’s the challenge: HP CFO Catherine (Cathie) Lesjak is cautious about HP hardware sales, though Lesjak sounded confident HP will hit Q4 earnings projections.

Whitman, Lane and Lesjak addressed Wall Street analysts today after HP ousted former CEO Leo Apotheker. Some analysts questioned HP’s decision to name a new CEO without conducting an exhaustive search spanning internal and external CEO candidates. But Lane defended HP’s board and said Whitman is the best choice for the CEO post.

Same Challenges, New Leaders

Whitman and Lane indicated that they are committed to HP’s current strategy, which includes:

  • Acquiring Autonomy, a software provider, for $10 billion; the deal is expected to close by the end of the year.

  • Evaluating the potential spin-off of HP’s $40 billion PC business; a decision is expected by the end of 2011.

  • Exploring options for WebOS, which became an orphaned operating system when HP killed its WebOS TouchPad and smartphone business in August.

  • Furthering HP’s server, networking, storage, printing, PC, software and service offerings.

HP CFO Cautious About Hardware Revenues

Still, furthering HP’s hardware efforts won’t be easy. CFO Cathie Lesjak said HP continues to see “softness in Europe and a slowdown in public sector spending. I feel confident on our EPS (earnings per share) guidance…” but Lesjak said she has “less certainty in our revenue [forecast] and specifically with our hardware business, so I’m remaining cautious on Q4 revenue outlook.”

PC Decision Coming Soon

Lane indicated that HP will not abandon the PC market. Instead, he sees the potential spin-out of HP’s PC business as a strategic step that could help the PC business move more quickly and gain more value. Lane also indicated that a standalone PC business could carry the HP moniker. But HP will only spin off the PC business if it makes sense for customers and shareholders, Lane concluded.

With or without PCs inside HP, the technology giant will depend heavily on hardware sales for years to come, Lane and Whitman indicated. “We have $120 billion of hardware business that we care dearly about,” asserted Lane.

Whitman indicated that she has already met with her new direct reports. “We’ll function as a team in way we haven’t for quite some time,” said Whitman, perhaps referring to Apotheker’s alleged leadership failings.

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