Profitable growth is one of Hewlett-Packard Co’s top priorities for the 1990s, president John Young told securities analysts at the company’s regular six-monthly briefing in New York this week. In the 1970s, the proportion of capital spending in the US devoted to electronics rose rapidly, he said. That percentage peaked in 1984 and has remained relatively stable ever since. The same trend is appearing outside the US, so we can no longer count on the rising tide of electronics spending to raise all boats. Seeking out new growth opportunities in this environment will increasingly require a great deal of insight and skill. Areas the company is pursuing include applying its existing measurement, computing and networking to the medical care and chemical-analysis markets, and expanding its lines of peripherals for the Apple Apple Macintosh. It also sees opportunities in digital-cellular communication for applying technologies from its instruments business as defence business slows. The company acknowledges an industry-wide slowdown in growth rates for workstations, but hopes that its new combined Hewlett-Apollo models and the station it has under development using its new sub-micron CMOS Precision Architecture RISC – to deliver at least 50 MIPS performance, will keep its business ticking over by offering imprived price-perfromance. The company’s business through dealers has grown at a compound annual rate of 50% since 1984, and this, coupled with the much greater proportion of its business done with low-ticket items has increased the company’s cost of sales as a percentage of net revenue. To offset that, the company is trying to limit growth in operating costs, with the job cuts of the last six months, which have reduced its headcount by 2,000, still to feed through to the bottom line. The company is also looking to cut costs by consolidating manufacturing facilities. When completed, such consolidations will result in total savings of approximately $60m, annually, the company said, with most of the costs associated with the consolidations having been paid for already. On the product front, sales of multi-user Unix computers rose 67% percent in the first half of 1990, up from 42% in fiscal 1989. Open systems and emerging standards are challenging the status quo in the computer industry, so that instead of becoming more concentrated, competition is growing more fragmented, the company said. Separately, Hewlett on Wednesday distributed profit-sharing cheques totalling $70.7m to 87,000 qualifying employees around the world.
