=DJ H-P CEO -3: IT Industry To Grow More Slowly, Consolidate
According to CEO Fiorina, H-P sales and customer service employees already have a "playbook in hand" and as of Tuesday are providing details to customers. She said H-P has already named three levels of management and is in the process of naming the fourth level. The executive noted that as of Tuesday, customers can purchase products on H-P's new integrated Web site that services nine countries in multiple languages.
Fiorina also used the occasion of the combined company's launch to lay out her perception of where the information technology industry is heading. According to the executive, the changes that are going on in the industry are more obvious today then they were seven or eight months ago.
"This is an industry that will be characterized by slower growth," said Fiorina. It will never return to the heady days of 20%, 30% and 40% growth, she said. The information technology industry will also be marked by consolidation as well as requirement for companies to have a sustainable business model, said the executive.
To ensure H-P continues to innovate, Fiorina said the company will spend over $4 billion on research and development every year. "This new H-P comes to market as the single largest consumer IT company in the world," said Fiorina, noting that the merged H-P begins with over $5 billion in new contracts.
In a press release issued Tuesday, H-P said that over $5 billion in contracts came in the three-month period prior to completion of its merger with Compaq. Particular strength came from financial services, communications and manufacturing customers, said the company.
During the press conference, Bob Wayman, H-P's CFO, said the company's target to cut $2.5 billion of costs could have upside.
The potential upside, said the CFO, will come from the fact that the new company will double the size of its enterprise sales force and will also have a stronger product offering. The CFO added that there is potential upside to its revenue targets as well.
Shares of H-P were recently trading up 2%, or 35 cents, to $18.55, on volume of 19.3 million shares. Average daily volume is 12.3 million shares.
-By Donna Fuscaldo; Dow Jones Newswires; 201-938-5253; donna.fuscaldo@dowjones.com
(END) DOW JONES NEWS 05-07-02
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