Hewlett-Packard Co. (HP) expects fiscal 2008 to be another solid financial year as the company continues to fine-tune its cost structure in an attempt to become more operationally efficient.
HP Executive Vice President and Chief Financial Officer Bob Wayman, one day after announcing he will retire on Jan. 1, outlined the company's expectations for fiscal year 2008, projecting revenue between US$100.9 billion and $102.8 billion. The figures represent year-over-year growth of 4 percent to 6 percent and are in line with what analysts expected. The projections are also similar to the company's performance in fiscal 2006, when revenue of $91.7 billion represented 6 percent growth over previous-year revenue of $86.7 billion.
HP already has set guidance for fiscal 2007, which began on Nov. 1, at $97 billion in revenue, or GAAP (generally accepted accounting principles) earnings per share of $2.28 to $2.33. Wayman set 2008 financial projections as part of a meeting with securities analysts in New York on Tuesday, where he and other HP executives laid out the company's goals for the next couple of years.
Breaking it down by business segment, HP also expects growth in its Personal Systems Group, Imaging and Printing Group, Enterprise Storage and Servers and HP Services divisions to be between 4 percent to 6 percent in 2008. However, growth should be higher in both its Software and HP Financial Services segments, the company said. HP expects its software business, recently buoyed by its acquisition of Mercury Interactive Corp., to have 10 percent to 15 percent growth in fiscal 2007, while its financial services business will grow 6 percent to 8 percent.
Speaking at Tuesday's event, HP Chief Executive Officer Mark Hurd said the company is a work in progress as it strives to achieve goals he laid out when he joined the company in late March 2005. To streamline the business, HP began a massive restructuring last year that resulted in 10 percent of its workforce being cut. Hurd implied Tuesday there would be more slicing and dicing throughout HP to create a leaner business.
As a result, operating margins should gradually improve over the next couple of years. In 2006 operating margins were 8 percent; in fiscal 2008 the company is projecting that will climb to between 9 percent to 9.5 percent, it said Tuesday. "We're committed to taking care of our business and our cost issues," Hurd told analysts.