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Faced with a turnaround that may take until 2016 to complete, Hewlett-Packard is about to find out who its real friends are in the channel. Of course, this test of loyalty works both ways.
HP CEO Meg Whitman in recent weeks has been holding partner roundtable meetings, and she reiterated her commitment to the channel Wednesday in HP's annual meeting with Wall Street analysts. Yet with HP shares at their lowest levels in nine years, and misguided strategic decisions coming home to roost on HP's balance sheet, some partners are exploring contingency plans.
"While we remain steadfast in our commitment as an HP partner, we have no choice but to continue growing our partnerships with other tier-1 manufacturing partners," said one HP partner, who requested anonymity.
Whitman told analysts that HP will start to recover in 2014 and will see growth in line with gross domestic product in 2016. While the partner isn't worried about the health of his HP business, the length of the recovery window Whitman outlined is eroding his confidence in the company.
"We certainly expect to grow our HP revenue at a faster clip than HP itself will, but that isn’t good enough," said the source. "We need an HP that is a market leader, and while I do believe the ship is now headed in the correct direction, we can’t simply wait for HP to fire on all cylinders."
HP's fiscal 2013 profit forecast missed Wall Street's expectations by a country mile, and every business unit except HP Software is expected to see revenue declines. HP has nearly $30 billion in short- and long-term debt and is facing slowing demand for PCs and printers. Enterprise Services is expected to see revenue decline between 11 and 13 percent with 0 to 3 percent operating margin.
Can HP's longstanding channel friendliness withstand these enormous financial pressures? Already there are signs of HP stepping on partners' toes in its search for additional revenue.
"HP needs channel partners now more than ever. But certain business units, and individuals, want to take accounts direct to be more profitable and cut partners out," one HP partner told CRN, speaking on condition of anonymity.
NEXT: Signs Of Support In HP Channel