When your partners become your competitors, it changes the game. But is HP really blaming Microsoft and Intel for flat revenue?
At its 2013 Securities Analyst Meeting, the company’s leadership team provided an update on its progress executing against its turnaround plan and future strategy. HP president and CEO Meg Whitman described the past year as a “fix and rebuild” period, and insisted the multi-year turnaround is on track.
As evidence, the company has met or exceeded quarterly non-GAAP diluted earnings per share outlook since the turnaround plan began. HP said in August that it expects free cash flow to approach $8 billion by the end of fiscal year 2013.
What’s more, Whitman’s team has reduced operating company net debt by almost $8 billion over the past 12 months and recommitted to smarter innovation with research and development spending expected to exceed $3 billion in fiscal 2013.
“While there is a lot more work to be done, I am confident about the progress we are making,” said Whitman. “We’re producing tangible results, strengthening our balance sheet and delivering innovative products across all our key segments. We are implementing the changes needed to support our multi-year turnaround journey, reaffirm HP’s leadership position, and create enduring value for customers as well as for our shareholders.”
While the company faces a challenging macro environment, shifting market forces and a rapidly changing competitive landscape, Whitman emphasized that the company has the right leadership team in place to advance its strategy, drive innovation across the business and improve its go-to-market execution. Whitman reiterated that she expects HP’s revenues to grow in line with gross domestic product over the long term.
Nevertheless, with pockets of growth helping to offset continuing challenges in the macro environment and weak public sector spending, HP expects the year-over-year revenue decline in fiscal 2014 will moderate from fiscal 2013. Specifically, HP anticipates operating profit dollars to be flat to up, year-over-year in fiscal 2014, due to its continued focus on cost savings and operational efficiency.
But both Whitman and Dion Weisler, executive vice president of printing and personal systems at HP, said something else that is turning heads. Weisler noted that in the past, if you played by the Wintel playbook you could pretty much predict your results.
“You just needed to run a little faster than the other guy," he said. "Everything was pretty predictable . . . [but] we're in a new world now with multiple operating systems, new architectures, new silicon, new graphics, new subsystems." (continued...)