Tuesday, May 16, 2006

HP's profits shoot up!

Hewlett Packards quarterly earnings jumped 51%, buoyed by cost cuts and improvements in its PC business and printing division.

They reported earnings of $1.46 billion, or 51 cents a share, for the three months ended April 30. A year earlier, they had a profit of $966 million, or 33 cents a share.

Mark Hurd, HP's new CEO is developing quite a reputation, for he has beaten analyst expectations for the last three quarters. And it looks like he is exactly the right guy to turn ex-CEO Fiorina's strategy into reality.

For it was her daring bid to merge HP with Compaq and challenge Dell for the number 1 PC maker slot that is driving their performance. The PC, server and laptop businesses are gaining ground and market share against Dell and the gap between the two companies is narrowing sharply.

HP is benefitting from lower producer prices and so can attack Dell and other's on price. Dell may well now be forced to finally rethink their Intel only strategy.

HP's Hurd has proven that he and his team can be superb at execution, soon he will also have to prove that he can be strategic, for HP should continue along its natural path as a consolidator of the tech industry and they are weak in both software and services.

Merging with Sun Microsystems or SAP could prove the kind of audacious moves that might finally vault HP back to the world leader status it once enjoyed.

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