Tuesday, 25 November 2008

HP “won’t chase dodgy deals”

(By Anthony Miller) There was little extra comment HP CEO Mark Hurd could add last night to HP’s 4Q/FY08 results having pre-announced the numbers last week to calm market nerves (see HP expects to beat ’09 consensus forecasts). He made it clear, though, that HP would not chase “dodgy deals” in order to make their top-line guidance, and felt confident they could hit earnings forecasts should market conditions worsen and revenues fall short. This is pretty much the way most executives we spoke to are managing the business, i.e. protecting earnings and cash above all else.

Hurd reiterated that the many elements of the integration of EDS-an-HP-company (sorry, reflex action) was either on or ahead of plan, confirming that the Texas-based services giant added $3.9bn to 4Q revenues in the two months since the deal closed. HP’s own services business performed much according to expectations in Q4, i.e. Outsourcing did best (+15% yoy), then Technology Services (+10% yoy), with Consulting and Integration only up 2%. In fact, on a sequential basis, C&I revenues fell 4%.

We are very supportive of the HP/EDS merger so long as Hurd lets the EDS guys (in EMEA, of course, that’s Bill Thomas) get on with job they know how to do best. In effect, EDS sales reps now have a free entry ticket into every HP account in the land. This is a gift not just for Christmas ...

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