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December 12, 2006

HP aims to top $100bn in 2008 and plans more cost cuts

Hewlett-Packard Co expects to follow 6% growth to $97bn in 2007 with a 4% to 6% increase to a range of $100.9bn to $102.8bn in 2008, with expansion driven by its computer hardware and printing business.

By CBR Staff Writer

But CEO Mark Hurd warned that the company, which has shed 15,000 jobs this year, had more work to do to trim expenses, though he did not go into details. We have more work to do. We are a company that is transforming – not a company that has transformed, he told an analysts’ conference in New York.

He was brutally critical about the company he inherited from ousted CEO Carly Fiorina, which he said was characterized by inconsistent results, mixed morale and uncompetitive cost structure and was difficult to do business with. Now he said they have improved the shareholder return, strengthened the leadership team, improved morale and had reduced the layers to the customer.

The recent $4.5bn acquisition of Mercury Interactive had created expectations on Wall Street that HP would pursue other large targets, and on Monday rumors had swept the market that the company was planning to buy security software vendor Symantec Corp. However Hurd said HP wasn’t likely to focus on large acquisitions but instead would pursue targeted purchases.

Hurd said the goal was to become the leading technology and infrastructure company and said the total market opportunity in 2009 was greater than $1tr.

Long-serving CFO Robert Wayman, who is retiring at the end of the year, said the business expected revenue in its personal systems, services and imaging and printing units to increase 4% to 6% in 2008, while software should increase by 10% to 15%.

The problem for Hurd is that his performance so far has raised expectations, and the grumbles now amongst analysts is that future growth forecasts are too conservative.

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