HP CEO: No sign of an economic turnaround

Fiorina sees stabilization, but no pickup

NEW YORK - While Hewlett-Packard sees signs of stabilization in the U.S. economy, there's no indication of a pickup, HP chairman and CEO Carly Fiorina said Tuesday during a meeting here with financial analysts.

Nevertheless, HP is confident it can continue growing by expanding its share of the technology market.

"We don't need IT spending to grow. We need customers to spend more of their IT dollars on us," Fiorina said.

HP's revenue is on track to reach $36.6 billion in the second half of its 2003 fiscal year, a 6 percent increase over the second half of 2002, she said.

HP is realizing its Compaq-merger goal of lifting itself into the top echelon of IT vendors, according to Fiorina. The new "adaptive enterprise" strategy the company laid out last month has helped in positioning the company there, she said.

"We're now moving to a whole new level of conversation with CEOs and CIOs," Fiorina said.

Executives particularly singled out HP's advances in the services market. Citing HP's recent win of a $3 billion outsourcing contract from Procter & Gamble, executive vice president of HP Services Ann Livermore said the company has now demonstrated that it can compete against anyone to win "megadeals."

"We really think this quarter was important to establishing us as the best alternative to IBM in the services space," Livermore said.

With HP declaring its integration of Compaq essentially done, Fiorina fielded a question from an analyst about HP's interest in another acquisition of a large company, one with thousands of employees and more than $1 billion in annual revenue.

"Now that we all know they work?" she quipped.

The size of a deal shouldn't be a factor in decisions about acquisitions; what matters is that the buyout fills a strategic gap, Fiorina answered. Adding the caveat that her willingness to speculate about acquisitions isn't an indication of anything in the works, Fiorina said software and services remain the areas in which she'd consider going shopping.

"Certainly from a readiness point of view, we are now ready to take on more than we were a year ago, because we have the bulk of [integrating Compaq] behind us," she said.