HP pledges server, storage growth in year ahead

HP pledges server, storage growth in year ahead

Despite ongoing concerns about the health of the PC market, Hewlett-Packard is comfortable with its projections of revenue growth of between 15 and 17 per cent in fiscal 2001, Carly Fiorina, HP's chairman, CEO and president, said in a meeting with financial analysts.

The growth will be driven by sales of HP's "Internet infrastructure" products, which include Unix servers, storage equipment and software products. Sales of those products began accelerating at the end of fiscal 2000, and will continue to grow in the coming year, particularly among US businesses, Fiorina said.

HP badly missed earnings predictions for its fourth quarter of 2000, which ended October 31, and Fiorina sought to reassure investors that the company's outlook is strong. The company has worked hard to overhaul its server and storage offerings during the year, and those investments are now beginning to pay off, she said.

As an incentive to boost profits, HP has adjusted the way it allocates bonuses, tying rewards to profit growth as well as revenue targets, she said. No HP executives will get their bonus for the second half of fiscal 2000, she said.

"There are no executive bonuses being paid -- starting with myself but not ending with myself -- in the second half of 2000," she told financial analysts. "We are very serious about balancing top line growth with bottom line profitability."

PC sales will increase in single digits only compared with fiscal 2000, but HP had allowed for that when it put together its financial forecast, she said.

HP expects consumer PC sales to grow by about 18 per cent in 2001, driven by sales outside the US. That's down from growth of 75 per cent in HP's fiscal year 2000. HP's consumer PC business accounts for about 10 per cent of its total sales.

Business PC sales will grow about 5 per cent in fiscal 2001, compared with a decline of about 2 per cent in sales the previous year, Fiorina said.

HP sees the Unix server business as a "two-horse" race between HP and Sun Microsystems, she said. "In the Unix space we think we are in a position to seriously challenge Sun for the first time, and we believe we're pulling away from IBM and Compaq" Fiorina said.

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