HP CEO Whitman: Company Is Firing On All Cylinders As It Gets Set To Split In Two


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Hewlett-Packard CEO Meg Whitman Tuesday said the company is firing on all cylinders as it prepares to split into two new Fortune 50 publicly held companies.

Despite a negative impact from a strengthening U.S. dollar that caused HP to take down fiscal year 2015 earnings by 30 cents per share, Whitman told Wall Street analysts that she is confident the HP turnaround remains on track.

In fact, Whitman said she believes HP can still deliver flat sales for the full fiscal year on a constant-currency basis despite the currency headwinds.

[Related: HP Shares Slide In After-Hours Trading On 5 Percent Sales Drop, Currency Issues]

"We feel very strongly the turnaround is on track," said Whitman. "You can see it in terms of margin expansion across all the major lines of business. You can see it in growth in areas of the company that I think people were not sure we would turn around, like industry-standard servers and PCs."

The upbeat assessment came after HP reported non-GAAP diluted earnings of 92 cents per share on a 5 percent drop in sales to $26.8 billion. The Wall Street consensus was earnings of 91 cents per share on sales of $27.4 billion.

Among the bright spots was 7 percent growth in industry-standard server sales led by HP's Gen9 servers. HP said Gen9 represents one of the fastest-ever server sales ramps -- much faster than the Gen8 servers. "The Gen9 server was dead-on from a market perspective," said Whitman.

Whitman said the industry-standard server business is, perhaps, the biggest turnaround for HP over the last several years. "This was a very troubled business two years ago," she said."The [enterprise] team has done a remarkable job."

The biggest wild card in the flat constant-currency forecast is improved revenue performance from HP's Enterprise Services business in the second half of the year. In the first quarter, HP's Enterprise Services business was down 11 percent.

A positive note for HP Enterprise Services was an impressive multibillion-dollar, 10-year hosting and outsourcing agreement with German global banking behemoth Deutsche Bank that was just announced on Tuesday.  The services-led deal, which was was two years in the making, represented a companywide effort that included HP's Helion cloud business and the enterprise group, said Whitman.

Whitman said HP had the "best technical solution," including its Helion Cloud, for Deutsche Bank to reduce costs significantly, increase IT agility and migrate to a new-style, IT cloud-based Dev/Ops environment. "Everyone in the industry wanted this business," she said. "It was a hallmark, or lighthouse, account."

Jed Ayres, chief marketing officer for MCPc, a $262 million, Cleveland-based national solution provider ranked No. 89 on the CRN Solution Provider 500 list, said the Deutsche Bank win and the rebound in HP industry-standard server sales is a sign that Whitman's hefty investment in innovative new products is paying off.

"Whitman is doing a great job," said Ayres. "This is going to come down to innovation and execution, and HP is performing well on both fronts. HP is warming up for the big dance in the data center with Moonshot, Nutanix and Memristor. They are firing on all cylinders when it comes to innovation."

NEXT: HP Is Bullish On Gen9 Windows Server 2003 Refresh Cycle

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