May 5, 2003 6:50 PM PDT

HP to outline new high-end strategy

Hewlett-Packard plans on Tuesday to announce a revamped strategy to target large-business customers, part of an ongoing effort by the company to turn around its money-losing high-end computer business.

The new push, which comes one year after the acquisition of Compaq Computer was completed, will be unveiled at an event in San Jose, Calif., with CEO Carly Fiorina and other top executives, according to an invitation to the event.

HP is expected to unveil a variety of products and services that it will tout as being able to help companies create computer systems that are more flexible.

One piece of this strategy is software that HP is calling Self-Healing Services, according to a source familiar with the company's plans. Another component is what HP is labeling the Virtual Server Environment (VSE), which is designed to allow IT managers to better monitor how their computing resources are being used, the source said. HP is also expected to unveil a new advertising campaign aimed directly at the chief information officers of large companies.

Merrill Lynch analyst Steven Milunovich said in a research note on Monday that he expects HP to further outline its Adaptive Infrastructure concept. "HP should announce a software architecture from applications to the data center," Milunovich said.

An HP representative declined to comment.

Last week, HP shuffled several executives in the Enterprise Systems Group (ESG), the HP unit that handles servers, storage and software. The company combined its server and storage groups under Senior VP Scott Stallard, while creating a new unit aimed at more tightly linking sales and services and another focused on operations.

Turning around the high-end computing unit was cited as a key strategic impetus for the Compaq deal. So far the company has narrowed its losses, through a combination of layoffs and other cost savings. The company has committed to turning a profit in that unit sometime before its fiscal year ends in October.

"We are on track to deliver what we committed to the company," ESG chief Peter Blackmore said on a conference call last week.

In its most recently reported quarter, HP said it had an operating loss of $83 million during the three months ended Jan. 31, down from $129 million in the prior quarter.

 

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