HP promised even more profits to analysts

HP pledged more than improved sales for the coming quarters when it met with analysts in the first week of June. The company said it expects increased profits over the final two quarters of fiscal 2004. The company said that its imaging products — cameras and printers — have been providing something less than 70 percent of its profits, down from 150 percent of all profit in HP just two years ago. CEO Carly Fiorina said HP can deliver earnings growth of greater than 20 percent for fiscal 2004, as well as 2005-2006.

Those printer numbers have been among the reasons that analysts remain wary about the company’s long-term futures in non-imaging products: the enterprise servers that HP wants customers to buy to replace their HP 3000s, for example. One analyst, Steve Milunovich of Merrill Lynch, called for HP to break itself up again, either to divide its printer business from its computers, or its consumer products from the high-end enterprise products.

The company’s CEO pointed out that HP and IBM are in different businesses these days, then ticked off a handful of ventures which HP 3000 customers will remember from better times for the platform: databases, high-end mainframes, and processor technology. These are “slow-growing” categories, Fiorina said. In contrast, HP expects to build its profits by increasing the number of sales it makes directly to customers; increasing its “share of wallet” with those customers by getting them to spend more of their budgets with HP; and by expanding into new offerings such as the Adaptive Enterprise, simplified technology for small businesses, and digital entertainment. HP said it’s taken $7.8 billion in orders for the Adaptive Enterprise since the company introduced the initiative in 2003. On the horizon is what analysts are calling the “H-Pod,” HP’s OEM re-branded version of Apple’s iPod digital music player.

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