Ovum: HP restructure necessary, but where is Whitman leading the company?

Analyst sees R&D investment as positive, but questions Whitman’s vision

HP’s recent restructuring, which saw it slash 27,000 jobs which presents eight per cent of its workforce, is a necessary move in order for the company to restore both customer and market confidence after a rocky two years, according to Ovum principal analyst, John Madden.

Although there is much scepticism surrounding the move, Madden believes that it is encouraging that the savings will be directed towards research and development (R&D) and will contribute to its recovery, despite having been recently neglected by HP.

Despite this, Ovum warns IT executives in looking to HP for projects that rely on innovation, sustained R&D, integration of acquisitions, and participation of key HP staff as these areas carry a higher risk profile.

“The ability to reinvest will be dependent on the stability of the revenue stream,” Madden said. “If sales soften then Whitman will be under pressure from Wall Street to not invest, but cut more.”

“As of now, we’ve seen the major pieces of Whitman’s restructuring and operations plan – the key missing piece is her long-term company vision and strategy, which hopefully will be revealed to an anxious customer base soon.”

This prompts the question of what sort of company HP wants to be in both the short and long term.

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More about: Hewlett-Packard, HP, Ovum, Wall Street
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