Hewlett-Packard executives said today that they predict more revenue and profit growth in the coming year. But they said little about who would be the next chief executive in an event for financial analysts today.
Cathie Lesjak, interim chief executive, said the company had good insider and outsider candidates to replace Mark Hurd, who resigned under pressure from the board because of his failure to disclose a close personal relationship with a former HP marketing contractor and because he fudged expenses related to it. Hurd has become co-president at Oracle, while HP is left without a leader.
Still, the company say it isn’t rudderless. To deal with the analysts in this time of uncertainty, HP decided to toss out as many numbers as it possibly could to impress investors with its size.
Lesjak said HP expects to grow revenues as much as 7 percent for the fiscal year that closes at the end of October, 2011, to $131.5 billion to $133.5 billion. Analysts had previously estimated that HP’s revenues would be $131.4 billion. Profits are expected to be $5.05 a share to $5.15 a share, compared to analysts’ expectations of $4.99.
Overall, growth in key segments such as the enterprise cloud, data center consolidation, security, digitization, and mobility will fuel the growth. HP’s strategy is to simplify enterprise computing for its customers, offering them a one-stop shop so that they don’t have to get all tangled up in mixing and matching technology from different vendors.
Oddly enough, HP started its slide presentation with an assessment of global macro trends. The company said that macro trends would help it out. The world’s population is expected to grow 20 percent by 2025 from 6.6 billion to 7.8 billion. The urban population is expanding by 60 million people a year, adding the population of Shanghai every quarter. The global middle class is expected to swell from 440 million to 1.2 billion by 2030. They say there are 1.8 billion people online, according to Internet World Stats. (I think they must have an asterisk that says as long as global warming doesn’t melt the ice caps). When you’re as big as HP, these types of numbers matter.
HP said there are 7.8 million server rooms in the world. The world also has 170,000 data centers that are up to 20,000 square feet in size, and another 14,000 enterprise-class data centers that are larger than 20,000 square feet. Those centers house more than 32 million servers, store 31 million terabytes, and use 1.2 billion ethernet switches. HP said the world has 500 million printers, 1.3 billion PCs, and 4.6 billion cell phones and mobile devices. A lot of the server population is aging and has to be replaced. Overall, HP says its addressable market is $1.6 trillion, the biggest of which is the $640 billion services market, followed by the $320 billion PC market and the $275 billion printer market.
To attack the growth opportunities, Lesjak said HP invested more than $16 billion in research and development over the last five years and increased its R&D headcount during the same period. (HP has been criticized for allowing its R&D as a percentage of sales to drop over the same time).
As for HP itself, the company said it has the largest information technology supply chain in the world at $60 billion. It ships a new server every 15 seconds and manages more than 200 data centers and 300,000 servers. It serves more than 1 billion customers on six continents, has 145,000 sales partners, 210,000 service partners, and
HP has also been on an acquisition spree, spending billions on 3Par, ArcSight, Palm, and Fortify this year.