Hurd Calls Channel Key Asset in HP's Race To $100 Billion

With both IBM and Dell vowing to use the channel to go after SMB accounts, Hewlett-Packard fired back with one of its best quarters ever and predicted that it will be the first IT company in history to pass $100 billion in annual sales.

A jovial HP Chairman and CEO Mark Hurd, in a conference call following the vendor's second quarter 2007 earnings release, told CRN: "The channel is huge; it's our key asset. We are embracing the channel. We love the channel. It gets us to a whole set of buying points that we think are extremely import. Our global reach, because of that reseller partner network that we have, is just a huge competitive advantage for us."

Hurd's comment came after HP reported revenue of $25.5 billion for its fiscal second quarter ended April 30, a 13 percent jump over the $22.6 billion recorded a year earlier. What's more, helped by the strongest quarterly revenue growth since the year 2000, Hurd said, "We now anticipate full year revenue of roughly $100 billion."

Earnings for the period reached $1.8 billion, a 7 percent decline from second quarter 2006. The 2006 quarter, however, included a one-time gain of 15 percent per share from a tax settlement.

Solution providers said they are seeing a big swing to HP at the expense of Dell. Rick Chernick, CEO of Camera Corner Connecting Point, a solution provider in Green Bay, Wis., said he just won a deal with HP at a Fortune 1000 account to replace Dell. "Businesses want service and support and face-to-face contact in addition to low prices," he said. "What swung the deal for us is that we brought the personal touch and the HP people were there in the field to support us. With HP we can bring people to the table and Dell doesn't have that."

Leading the way in HP's second quarter was the Personal Systems Group with revenue jumping 24 percent to $8.7 billion on a 30 percent growth in unit shipments. Notebook sales were up 45 percent, desktops jumped 9 percent and workstation sales grew 19 percent, Hurd said. PSG operating profit was $417 million, a 4.8 percent jump over the $248 million reported a year-earlier.

Hurd noted that PSG unit sales were growing at two and one-half times the overall market growth rate.

Imaging and Printing Group revenue reached $7.2 billion, or 6 percent over second quarter 2006. Multifunction printers sales were up 40 percent, while color laser printers grew 19 percent.

In Enterprise Storage and Servers, revenue grew 8 percent to $4.6 billion, lead by a 17 percent growth in industry standard servers and a 58 percent increase in blade servers.

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