Hewlett-Packard (HP) is looking for a second act. Several of them, actually.
Its turnaround was confirmed this year when profits from PCs, corporate servers and storage devices nearly doubled from a year earlier. It sold more PCs than any other maker and claimed the title of the world's largest technology company.
Goal
Now it has to sustain those gains. The US$92 billion company has set a goal of growing 6 percent next year and the year after. That means it must add about US$5.5 billion a year in new revenue, or about what Yahoo produces each year in total revenue.
"Scale has enormous advantages," Mark Hurd, HP's chairman and chief executive, said in a recent interview.
"One disadvantage is that billions of dollars of annual revenue growth may appear underwhelming expressed as a simple percentage figure," he said.
The Law of Big Numbers is the bane of any giant company. It decrees that a behemoth has a harder time growing as quickly as a small and nimble company.
Hewlett-Packard is no exception. It has cut 15,000 employees and plans to trim more of its US$84 billion in expenses to become more efficient and deploy the savings for growth, but cost-cutting improves the bottom line faster than it does the top line.
A debt-free company with an US$11 billion cash hoard, HP could acquire other companies, but it has said it prefers not to make any major acquisitions. It still needs to add revenue by growing from within, and that will not be easy.
"HP could do both," said Benjamin Reitzes, an analyst with UBS Investment Research.
"A company with almost US$100 billion in revenue should be doing both," he said.
It has some ideas. It is moving quickly to build printers for almost any application in which ink hits paper. Analysts say that is a slam dunk. Two other areas it has identified for growth, selling cost-efficient corporate data centers and consumer electronics, pose considerably more risk. Reitzes is confident that Hurd can succeed.
"He's worked some magic before," he said.
Printers are HP's sure thing. It makes nearly half the printers sold across the globe. The printer unit contributes half the company's profits, with enviable profit margins of 15 percent because of the ink and toner it sells for the printers.
So far, the company has avoided becoming complacent. It dominates the market for home printing, where 55 percent of all digital photographs are printed.
As consumers have begun shifting to printing digital photographs at stores, it is following them to wherever they choose to print. It builds in-store printing kiosks, sells digital prints online through its Snapfish.com service and runs the online or back shop photo-printing operations for major retailers like Wal-Mart Stores and Costco.
Shift
It is part of a shift in emphasis from printers to printing.
"Anything that is printed is an opportunity for HP," Vyomesh Joshi, the executive vice president for the imaging and printing group, said.
So the company is now selling large digital presses to commercial printers who make billboards or in-store marketing materials. It recently sold color digital presses to Amazon.com, the online retailer, which uses them to print books on demand.
The payoff is obvious.
"When you talk about liters of ink rather than milliliters of ink, that is exciting for us," Joshi said.
HP's move to sell the data center of the future stems from its perpetual drive to cut its overhead. As it consolidates its 85 US data centers into six, it is creating a showcase that its sales team can point to -- a computer room that would cost significantly less to run because it would be energy efficient and run with few technicians.
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