HP boss vows to boost services


HP boss vows to boost services

Simon Quicke

Hewlett-Packard's CEO has vowed to invest in services to give itself greater chances to grab revenue which it currently isn't competing for.

The focus on services emerged as one of the main themes of its second quarter financial results, which was also hit by the fallout from the Japanese earthquake and a decline in consumer spending.

The vendor had already taken the decision to bring the announcement of its results forward after a memo CEO Leo Apotheker sent to senior management revealing it would be another tough quarter leaked.

Having already prepared the ground the results for the three months ended 30 April were downbeat with a 3% increase in revenue to $31.6bn but performance was flat in Europe. Net earnings rose by 5% to $2.3bn.

The Personal Systems Group (PSG) revenue was the hardest hit in the quarter dropping by 5% year-on-year with consumer spending dropping by a quarter as users cut back on their purchases.

The firm's services operations grew by 2% but Apotheker promised to invest more to improve the performance in that pat of its business.

"We are accelerating our efforts to align our services business model to our long-term strategy to deliver unprecedented value to our customers and a better return for our shareholders," he said.

Other divisions performed solidly with the imaging and printing group enjoying demand from the commercial sector helping increase its revenue by 5% and the enterprise servers, storage and networking division benefiting from interest in the cloud, driving its turnover up by 15%.

But going forward things remain challenging and the outlook from the vendor was one that reflected the tone of the memo that Apotheker had sent to his managers.

With the repercussions of the Japanese earthquake still being felt and ongoing softness in consumer PC spending the revenue outlook for the third quarter is flat growth matching the $31bn generated in Q2.

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