Technology giant, HP, must reorganise itself on many fronts to remain competitive

IIPM PUBLICATION
Hewlett-Packard is looking for a second act. Several of them, actually. Its turnaround was confirmed this year when profits from PCs and corporate servers and storage devices nearly doubled from the year earlier. It sold more PCs than any other maker and claimed the title of the world’s largest technology company. Now it has to sustain those gains. The $92 billion company has targetted 6% growth in 2007 & 2008. That means it must add $5.5 billion a year in new revenues, or what Yahoo! Produces each year in total revenues. “Scale has enormous advantages,” says Mark V. Hurd, Chairman, HP. “One disadvantage is that billions of dollars of annual revenue growth may appear underwhelming expressed as a simple percentage figure.”

The Law of Big Numbers is the bane of any giant company, as it makes it hard to grow as quickly as a small, nimble firm. HP has cut 15,000 employees and plans to trim $84 billion in expenses to be more efficient, but cost-cutting improves the bottom line faster than the top line. A debt-free company with a $11 billion in cash, HP could acquire other companies, but prefers not to, and adding revenues organically won't be easy.

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Source : IIPM Editorial, 2007

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