December 7, 2004 8:47 AM PST

Fiorina: 'We've completed the transition'

Hewlett-Packard CEO Carly Fiorina said Tuesday her company has completed the transition following its massive merger three years ago and now needs only to deliver on existing strategies to stimulate growth.

Speaking in Boston to a group of financial analysts, the executive said the period of change that began with HP's buyout of rival Compaq Computer has officially ended. The massive IT conglomerate must now deliver on its established goals to grow and meet expectations, she added.

Fiorina repeatedly said that the company needs to be more consistent and disciplined in adhering to its plans to stimulate expansion in the markets where it already competes.

"Fundamentally, we've completed the transition of our operating model and have now arrived at the place we wanted to be," Fiorina said. "It's really about leveraging the portfolio we've built for leadership in the markets we serve. We know that we're at a point where we have the right products to compete in the right markets."

Fiorina also said the board discussed breaking up HP three times in the past, yet each time decided to keep it intact. Fiorina defended keeping the Silicon Valley legend intact, arguing that its businesses benefit from bundled sales.

"So many of the growth opportunities that are going to drive the business going forward now depend on the power of this portfolio," Fiorina said, referring to HP's four main businesses of servers and storage, services, personal computers and imaging and printing.

She did not specify when the board deliberated a break up.

The CEO didn't refer to IBM's much-rumored plan to sell off its PC business, but she restated HP's dedication to the hardware market, specifically related to computers, printers and digital-imaging products. HP remains No. 2 in the PC market behind Dell.

Among the strategies Fiorina highlighted are plans to accelerate growth in HP's software business, increase business with its existing customers, better manage the company's cost structure and use the management tools created for the merger to help its struggling business units.

Fiorina hinted that part of HP's plans to better control its spending would include layoffs, but she did not offer specifics on any potential job cuts. She said the company will hire some new workers and retrain other employees in order to maximize its staffing, and she indicated that the company will move other jobs' locations in order to boost profitability, a possible allusion to offshoring. In late November, HP said in a filing with the Securities and Exchange Commission that job cuts in the first half of 2005 will cost the company about $200 million.

The executive pointed to HP's continued work to invent new technologies as another major opportunity, citing the company's average of 11 new patents per day as evidence of its work, but said the firm must remain focused on driving revenue.

"It's not helpful just to generate patents," she said. "We want to contribute only where we can innovate and lead."

Another area Fiorina hopes to guide improvement at HP is in the company's ability to take advantage of its existing partnerships and to create new relationships. To that end, the company announced new deals with Oracle, Veritas and InfiniBand in the first week of December alone.

The HP chief outlined three specific trends in the IT market that she would like to see the company capitalize on: the shift from analog technologies to digital tools and content, the rise of more easily adaptable and modular computing networks, and the tailoring of products to meet the needs of specific vertical markets.

Reuters contributed to this report.

 

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