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Hurd Fleshes Out HP's Pros, Cons

HP is pinning its technology hopes on distributed computing, mobile computing and digital imaging as it moves toward the future.

During a meeting with securities analysts in New York today, HP CEO Mark Hurd outlined the companies strengths and weaknesses and pledged to align cost objectives with capabilities as part of the move to get the beleaguered company back to its glory days.

To help do this, the CEO said HP will focus on advancing its adaptive enterprise strategy as a move away from monolithic mainframes.

In the enterprise, Hurd predicted the cost of computing will decline in favor of customers as the industry shifts to standards. HP plans to be right there to serve customers with its technology, allowing customers to "dial up or dial down raw capacity" in a utility computing environment, he said.

Hurd said customers are demanding technology that won't require people to run it, or monitor it on a constant basis. Instead, the computing resources will be self-managing and provisioned and remotely controlled by the computer systems themselves.

"I think we're very well positioned to capitalize on this," Hurd said during his opening comments.

Hurd also said HP foresees an explosion in mobile computing, where consumers and corporate employees will use advanced handheld computing devices that let them switch from e-mail to voice mail and vice versa. HP plans to serve customers during this transitive time of convergence.

The last frontier that HP wants to have a controlling interest in is the burgeoning multi-function printer market. Though already a leader in the market for selling printers to consumers, Hurd said HP sees myriad opportunities to sell hybrid printers -- featuring printer, fax and scanner utilities -- to enterprises.

Hurd, who has scrutinized HP from top to bottom since taking over for ousted CEO Carly Fiorina last spring, also discussed the state of the company and where it wants to be in the future.

The skipper said that the company is undervalued despite having a load of talent and a deep technological well from which to dip.

Hurd said that after talking with over 400 HP customers, he learned the company was viewed as having a lot of innovative technology, but struggled to bring it to the market in a simple, but provocative way for customers.

"HP was viewed as a company that was tough to do business with," Hurd said. "It was tough to find resources and people who could make decisions. Our sales and go-to-market strategy was viewed as too complicated and slow."

He said that the matrices of the blended company with various business models made its difficult to deal with. Not only was there a dearth of accountability, but it was hard to govern each model with one, all-encompassing "peanut butter spread" of management.

But he promised that he and his team would reconcile that going forward by aligning each businesses cost structures to its respective capabilities.

"You have to align the capability you want with the function at the same time you align the cost," Hurd said, noting that he sees in his employees a will to win.

The end result? HP should grow and win more business from customers against competition like IBM, Sun Microsystems and Dell.

Hurd's strong operational approach were evident in the first quarter of his tenure.

The company reported April quarter earnings of 37 cents a share, a penny better than expected, and revenues rose 7 percent to $21.6 billion.

In the most recent quarter, HP reported blow-out quarterly results, showing none of the weakness that has plagued rivals in recent months.

HP CFO Bob Wayman told analysts at the meeting today that he expects profit of $1.88 to $1.95 per share for the year, and revenues of $89.5 billion to $91 billion for the year.