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Fiorina Says HP May Get Out Of The PC Business
Mikelgan writes: "Interex (the global HP user's group) is reporting that HP CEO Carly Fiorina told USA Today that HP may get out of the PC business altogether if the merger with Compaq fails. Here's the story."
they might as well kiss some of their largest customers goodbye. I know that my company is planning on purchasing about 100K new pc workstations over the next two years. They are also killing off MPE, which accounts for about 600 $250K and up systems that are going to be coming end of life in two years. I would suspect that without PC workstations, it would be better for us to package deal with IBM for workstations and AIX servers instead of only having HP her with HP-UX. I think HP would be wise to give Fiorina the boot. She has wrecked that company.
For the Record
Posted January 16, 2002
The following memo was written to Embedded and Personal Systems (EPS)
employees from EPS President Iain Morris to set the record straight
regarding recent press reports on the future of Hewlett-Packard's PC
business.
Dear All,
I would like to wish each of you a happy and productive 2002.
I'm writing to you to set the record straight regarding recent press reports
on the future of our PC business. You may have seen an article this Monday
in USA Today which claims that Carly "warned that, should it [the merger]
fail, HP's vaunted printer and imaging businesses would be damaged and HP
might have to shut down its personal computer division."
This is not the first time the press has zeroed in on the notion that we
should exit the PC business. Rather than suggesting we exit PCs, Carly was
explaining the importance of the merger -- in the context of a range of
strategic alternatives -- as a way to fix our PC business. She was also
responding to Walter Hewlett's assertion that PCs are a challenging business
(yet he fails to offer any thoughts on how to improve it).
According to the full transcript of the interview, what Carly said was: "It
[the merger] allows us to fix our PC business. We can't get out of our PC
business. If I didn't care about laying off people, I could just shut it
down. But if I shut it down, I'd have to lay off a lot more than 15,000
people across two companies over several years. So, we have to fix our PC
business. And fixing our PC business requires volume and distribution
capability."
To further clarify her remarks, the 15,000 figure has been included in our
filings with the U.S. Securities and Exchange Commission. It refers to the
estimated number of employee reductions of the combined HP and Compaq
workforce, which will total about 15,000 people. It does not specifically
refer to the PC business. The reductions are expected to occur during the
first two years after the merger closes and will be achieved through a
combination of targeted job reductions and attrition.
It is important for you to know that HP remains committed to the PC
business. By merging with Compaq, we believe the cost-savings from the
anticipated synergies and economies of scale will lower the cost structure
of our combined PC business and have a positive impact on margins. We will
also be able to leverage the significant progress Compaq has made developing
its direct distribution capabilities to create a more flexible distribution
model for the combined company and help us address this important industry
issue.
By combining HP's strength in the consumer PC business and Compaq's strength
in the commercial PC business, we will create a more balanced industry
leader. We also intend to create sustainable value in our PC and other
personal systems businesses by innovating across emerging categories and
delivering a new generation of connected access and embedded devices.
The merger also will provide important benefits to HP's imaging and printing
franchise (also mentioned in the USA Today article). By improving operating
margins in our other business segments, we expect to increase our investment
in core IPS research and development and new IPS initiatives such as digital
imaging and digital publishing - investments that are crucial to maintaining
our leadership in the IPS business. According to Carly: "Imaging and
Printing is not a cash cow. It is a growth engine that has to be invested in
if we're to capture the real growth opportunities in Imaging and Printing
going forward."
Our vision is to become a premier provider of the end-to-end solutions our
customers now demand. That requires us to be a leader in imaging and
printing and computing and services. It requires us to be a leader in both
the enterprise and the consumer space. PCs remain an important part of the
end-to-end solutions we provide.
In closing, let me thank all of you again for staying focused on the
business at hand, and for continuing to help HP emerge an even stronger
competitor when the economy rebounds. Here's to delighting our customers,
delivering results and beating the competition.
Thank you,
Iain