HP's Whitman no clearer on sale of PC business

Company to break record for use of the word 'commitment'.

New Hewlett-Packard president and chief executive officer Meg Whitman Thursday moved quickly to restore solution provider confidence in the world's largest IT company by pledging her commitment to the company's legacy hardware business.

However, she said nothing to clear the confusion affecting HP's customers and the channel, a key reason for the dismissal of her predecessor Leo Apotheker.

"I want to reiterate our commitment to the hardware business," said Whitman in a conference call with analysts after being named the latest chief executive officer in the 72-year history of HP. "The vast majority of the revenue of the company is still in the hardware business."

Uncertainty regarding the sale of the company's $US41 billion ($A41.9 billion) personal systems group has stalled hardware sales.

Whitman said it was important to make a decision about the sale.

"The best thing we can do is to get to a decision on PSG as fast as possible," said Whitman, who took eBay from a $4 million upstart to the world's largest online marketplace with $8 billion in sales when she left in 2008. "This decision is not like fine wine. It is not going to get better with age. We have got to do the analysis, get to the decision and then tell our customers and the market what it is we are going to do."

Whitman's commitment to the hardware business couldn't come quick enough given HP CFO Cathie Lesjak's warning on the conference call that it could miss revenue targets for this quarter because of uncertainty in the outlook for the hardware business.

Apotheker, a former CEO of software giant SAP, was focused on remaking the hardware behemoth into a software power despite software sales only accounting for about 2 percent of HP's annual sales. HP solution provider partners that built big businesses selling HP PCs, servers, networking gear and data centre solutions viewed Apotheker as a hardware antagonist.

Besides looking at spinning off the PC business, Apotheker's boldest move as CEO was the company's planned $10.3 billion acquisition of enterprise software maker Autonomy, a deal which has been widely criticised because of the high price that HP paid for the company.

When asked if she would review HP's recent strategic decisions, Whitman endorsed the moves made by Apotheker, herself and the rest of the board, including the Autonomy deal and the potential PC spinoff.

"From what I know now, I think the strategy is right and the initiatives we undertook on August 18 are right," she said. Whitman will review the "strategic initiatives" that were put in place at HP and "surface with my point of view on this." What's more, she acknowledged that HP has "got to leverage the entire portfolio to bring solutions to market that solve customer problems".

HP partners cheer hardware commitment

Despite Whitman not giving any definitive direction on the likely sale of the PC business, a number of US channel partners were confident of the sincerity of her stated commitment to maintain HP's focus on hardware.

John Convery, executive vice president of vendor relations for Denali Advanced Integration, one of HP's top US enterprise partners, applauded Whitman's recommitment to HP's hardware business.

"I am very pleased to hear that the new CEO says she is committed to hardware," said Convery, whose company shipped more than 25,000 HP PCs in the past year.

"I think the issue they had is the previous CEO lost sight of the real HP value proposition. We do IT consulting. It is a services-led model, but the hardware component is critical to provide the end-to-end solution. The value of HP has always been the full product portfolio from the desktop client to the data centre. Hardware is a critical piece to the total success of HP.

"HP has to get back to basics," said Convery. "It is all about execution. You have got to remember what got you to the dance, what gave you a competitive advantage. It is critical moving forward that the HP leadership understand that the tremendous value of HP lies in the breadth of their product offerings. They are the only company in the IT business that has that full product portfolio. Even with a personal systems group spinoff, it doesn't change the ability for each part of HP to leverage the strength of the total product portfolio."

Ray Lane, who moved from non-executive chairman to executive chairman of the board with Whitman's appointment, reasserted HP's commitment to the hardware business even as he endorsed the Autonomy acquisition and the PC spinoff as sound strategic moves.

Lane said HP's acquisition of Autonomy, a move aimed at making HP a leader in what he called unstructured information management, does not mean the board is intent on "transforming HP".

"That word has been stricken from our language," said Lane. "It does not mean we are transforming HP. HP is a $US120 billion [company]. With Autonomy's enormous success and enormous profitability and synergies we can gain, we think we can build a helluva business out of it. But it has nothing to do with transforming. Hopefully we will see a bigger software portfolio, and we'll see more value-added services at HP."

Whitman said she would ensure HP met its commitment to investors.

"I know that HP has disappointed investors in recent quarters and we are not happy about it," she said.

"Going forward HP will have no higher priority than to do everything in our power to meet the challenges of today's macroeconomic environment and frankly improve our operational and financial performance. At the same time, we have to deliver the world-class products, solutions and services our customers have come to expect from HP.

"We understand that our performance is under intense scrutiny and we will take the necessary actions to get HP back on track. That isn't something we can do overnight. It is going to take time. It is going to take a lot of hard work to bring all of the elements together."

This article originally appeared at crn.com