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|HP Details Turnaround Strategy, Provides 2013 Outlook|
Oct 03, 2012 (Marketwire via COMTEX) --At HP's (
During her keynote, HP's president and chief executive officer Meg Whitman outlined progress made over the past year to stabilize the business and lay the foundation for a multiyear turnaround. The operating and organizational models have been integrated, centralized and streamlined, and a talented executive team is in place to execute the strategy.
The company is positioned to extend its leadership into the major trends driving IT investment -- cloud computing, information optimization and data security. In May, HP initiated a multiyear restructuring designed to realign its cost structure and create investment capacity to drive innovation against its strategic priorities, strengthen market leadership and rebuild its balance sheet while returning capital to shareholders. Despite the challenging environment, the company has maintained research and development (R&D) spending, along with a steady focus on preserving the long-term health of the business. The company is on track to deliver on its savings targets and complete the restructuring by the end of fiscal 2014.
Whitman walked through a multiyear roadmap to turn the company around. By 2016, she expects the company's revenues to be growing in line with gross domestic product (GDP), with operating profit growing faster than revenues, industry-leading margins and disciplined capital allocation.
"HP has a powerful set of assets, a culture of engineering innovation and a trusted brand," said Whitman. "Now, we have to focus on bringing our incredible assets together to deliver for our customers, employees and shareholders."
Fiscal 2013 outlook
Throughout the day, HP's management team will lay out specific plans and goals for the company's turnaround, including:
HP Enterprise Services
Nefkens and Charhon will outline a detailed turnaround plan for HP Enterprise Services with the objective of driving margin improvement over time. The four pillars of the strategy are: improving the portfolio through innovation in the core and expanded offerings in higher-growth services such as cloud and information management; strengthening accountability and empowering account executives; optimizing the cost structure with a focus on account performance and improving account performance; and improving operating excellence with tools and processes and a formalized operating cadence.
Nefkens and Charhon will lay out an expected long-term operating model with HP Enterprise Services growing revenue at 3 to 5 percent annually, operating margins between 7 and 9 percent, and 15 to 25 percent return on invested capital. Long term, the company expects to improve the mix of services revenue so that about 80 percent of HP Enterprise Services revenue comes from the company's core data center, applications and business process outsourcing, and 20 percent of revenue is generated by the higher-growth, higher-margin services including cloud, security, mobility, applications modernization, transformation and integration, and information management and analytics.
HP Printing and Personal Systems
The PC group within HP PPS has been refocused around customer needs. The group also completed a major refresh of its product line with a focus on design. In addition, the group launched the HP ElitePad 900, the first tablet specifically designed for businesses big and small, and is reinvesting in mobility with a dedicated leadership team.
The printing group within HP PPS has been focused on developing new business models such as Ink Advantage, a program targeting price-sensitive customers in emerging markets that has expanded to 82 countries, and the Ink in the Office initiative, which is targeting business customers. The group has expanded differentiated services and solutions by leveraging HP's portfolio of hardware and software, including combining multifunction printers with Autonomy management solutions to develop cloud-based document management services.
HP Enterprise Group
Donatelli will detail the company's strategy to simplify the HP Enterprise Group's product portfolio through common architectures and convergence. By selling Converged Infrastructure, Converged Cloud and Software-defined Data Centers, HP expects to grow over the long term both revenue and market share in the key areas of networking, storage and cloud, while increasing revenue from HP's industry-leading x86 server business. In addition, the company's Project Moonshot is developing new ultralow-power server technologies that will address the fast growing HyperScale server market. HP was the first large server vendor to announce these servers, and the company expects that by 2015, ARM and Atom servers will represent 15 percent of the global server market.
In addition, Kadifa will talk about how HP Software is focused on integrating its acquired businesses and technologies with its existing software portfolio to deliver innovations in cloud management, security, big data and meaning-based computing.
HP Converged Cloud update
To supplement HP's historical and forecasted financial results presented on a GAAP basis, HP provides non-GAAP diluted earnings per share. Non-GAAP diluted earnings per share is defined to exclude the effects of any amortization of purchased intangible assets, restructuring charges and acquisition-related charges recorded during the relevant period. In addition, non-GAAP diluted earnings per share are adjusted by the amount of additional taxes or tax benefits associated with each non-GAAP item. HP's management uses non-GAAP diluted earnings per share for purposes of evaluating and forecasting HP's financial performance. HP believes that providing non-GAAP diluted earnings per share to investors in addition to the related GAAP measure provides investors with greater transparency to the information used by HP's management in its financial and operational decision-making and allows investors to see HP's results "through the eyes" of management. Non-GAAP diluted earnings per share may have limitations as an analytical tool, and this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for diluted earnings per share prepared in accordance with GAAP.
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© 2012 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP shall not be liable for technical or editorial errors or omissions contained herein.