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February 23, 1999

HP PROMISES NEW STRATEGY. VISION IS REQUIRED

By CBR Staff Writer

By William Fellows

Having missed the first internet wave, Hewlett-Packard Co will later this quarter reveal its plan to cash in on the second. It’s getting an image makeover, spending $100m on a new advertising campaign, will re-shuffle the decks to create a new internet division and has already committed to introduce application- specific servers such as Oracle’s Raw Iron. That’s all very well, but what it needs above all else is vision. Otherwise it’s playing catch-up with Sun, IBM and other perceived market leaders. Anne Livermore, heir apparent to CEO Lew Platt – who’s days at the helm, according to unsubstantiated Wall Street scuttlebutt, are numbered – has said the plan is for HP to grow ahead of the curve in every business it operates in. But six months into a restructuring there’s little evidence it can get the top line moving. It’s had consultant McKinsey & Co in for a few months giving it advice about what it should do. Some suggest breaking out the printer, computer systems and other groups as separate concerns to stimulate the activities of each. Certainly when financial analysts begin asking questions like whether the Unix systems business is a viable one for HP, there’s obviously something out of kilter. Reportedly, McKinsey has delivered a presentation of its recommendations to HP’s board regarding changes in the company’s directions. Brokerage Merrill Lynch & Co recently observed that HP has no clear positioning and too many businesses. Moreover, it lacks an internet aura. No one at HP wanted to comment.

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