Hewlett Packard - going out with a whimper?
- Summary:
- Meg Whitman reckons HP is executing its strategy with military precision - as revenues and profit continue to decline.
It’s a case of out with a whimper as Hewlett Packard (HP) enters its final quarter as a single company on the back of sliding profits and revenues.
Pretty much all of HP’s business units saw decline during the third quarter:
Net income of $854 million was down 13% year-on-year on revenue of $25.3 billion was down 8% year-on-year.
CEO Meg Whitman is of course, by necessity, upbeat regardless, talking of:
executing with military precision one of the largest and most complex separations that has ever been undertaken…even with the separation process heating up, we remained focused and continued to execute well across the businesses.
Huh?
- PC revenue was down 13%
- Printing revenue was down 9%
- Enterprise Services revenue was down 11%
- Software revenue was down 6%.
To top things off, the firm’s expecting worse to come in the fourth quarter, its final one before the company splits into two entities, one focused on PCs and printers, the other selling commercial tech products.
Despite that, Whitman insists that the firm is reaching a tipping point:
You've all heard us talk about that we have businesses where the declining businesses have been bigger than the growing businesses. We're now rounding the corner where the growing businesses are bigger than the declining businesses, which is actually going to lead to growth. And boy, that has taken a while to get here, but we're here. And I think that sets Hewlett-Packard Enterprise up pretty well as we think about growth going forward.
One positive to which Whitman points is a claim that HP has finally decided on a long term go-to-market strategy:
Part of the challenge we had prior to me was the fact that we changed our go-to-market so many times. Every CEO had a different idea about how to go to market. We just locked on one and we're driving it. There might be things we can do to optimize, but we've got a strategy and we're driving it. I think that's given the sales force and customers a lot of confidence.
She also maintains that the HP message to the market, partners and customers is now being communicated and received more positively:
The first couple years was more internally focused. We've been out with customers. I would say our customer and partner confidence is at an all-time high.
As to the forthcoming separation itself, a number of key milestones have been passed. Whitman says:
On August 1, we successfully split the operations and IT systems for the company. This was an incredibly complex process, and the team executed very well. This separation required working directly with more than 3,500 customers and partners to prepare for the cutover. We successfully separated nearly 750 systems affecting 95% of our business with no issues. 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.
Finally, just last week we introduced the expected members of the Board of Directors for both Hewlett-Packard Enterprise and HP, Inc. We hand-picked both boards to create the most experienced global-minded members we could find to help each company win in their unique markets. We're very proud of the diversity of these two boards and what it says about the importance we place on having people representative of our customer base participate in our decision-making.
My take
One last quarter to go as a united entity and it’s unlikely to be a happy one.
I'm really not clear exactly which military campaign Whitman reckons is being precisely executed here.