Hurd's Mentality: HP's New CEO Making Inroads

Thanks to a favorable earnings period, several key product launches and newly announced programs in strategic technology categories, Hewlett-Packard's new CEO, Mark Hurd, appears to be off to a good start. But make no mistake: He still has his work cut out for him to turn HP around.
Under the Microscope

While Hurd is scrutinizing HP's storage business, the company's lucrative printing and imaging business also is under the microscope. Revenue from its printing and imaging group increased 5 percent, totaling $6.4 billion. Profits were up only 12.7 percent, or $814 million, impacted by price cuts made earlier in the year. Hurd said the pricing actions were necessary to keep HP competitive. Canon, Dell, Lexmark, Sharp and Xerox, among others, have all refreshed their printer lines with products, many of which outpaced HP on the price-performance curve.

So, just as the company refreshed its storage line, HP rolled out a slew of new printers. Among them are the color LaserJet 2600n printer. Priced at $399, HP said it boasts speeds of up to 60 percent more than existing color lasers. HP also added the new DeskJet 9800 Series, a high-speed, wide-format inkjet printer that produces 4,800-dpi outputs; the DesignJet 70, targeting retail users, design schools and even computer-aided design users; and the HP Color LaserJet 2800 All-in-One series of multifunction printers.

HP is fighting to boost profitability in its printing and imaging business with huge cuts, including staff reductions and exiting the high-end copier business it entered two years ago with much fanfare. Despite that latter pullback, rivals are not counting HP out yet.

"We don't tend to think HP is never going to be back," says David Bates, director of product marketing for Xerox's office products group.

Suffice to say, the industry will be watching closely to see what bold moves Hurd will make. "We are working as quickly as we can," Hurd told investors. "We are in a sprint to get the company in shape to go run a marathon."

Hurd's Challenges

Storage: Strong product refresh and some new entres in growing areas where HP was absent. But, for now, the company is losing share at the expense of EMC and Network Appliance.

Software: While HP's business dwarfs others and remains unprofitable, it continues to grow. And with fat margins and Hurd's background, look for an increased focus here.

Printing and imaging: HP will seek to keep share with price cuts, but Dell will continue to loom large in the SMB segment of the printing and imaging business.