Hewlett-Packard Company (HPQ) held its Strategy Summit in San Francisco, yesterday. The tech giant’s new chief executive officer (CEO) Leo Apothekar chalked out a long-term strategy in the meet, to boost sales and stabilize share-price volatility. The CEO also asserted the convergence of cloud computing and mobile connectivity.
Keeping in view the enormous potential in the cloud, HP will now focus on developing a portfolio of cloud technology, which will include infrastructure and platform services. The HP chief also plans to develop and run the industry’s first-ever open cloud marketplace that will combine a consumer app store and enterprise application services catalog. As stated at the Summit, HP believes it could lead the cloud space with its strong product portfolio.
Recently, HP completed the integration of 3PAR Inc. into its Converged Infrastructure portfolio, which has been designed to make data center operation more simple, flexible, efficient and cost effective. Leveraging 3PAR’s storage platform, HP introduced virtualization and deduplication of storage solutions that will enable more scalable cloud computing.
Turning to connectivity, HP plans to build the webOS (operating system), which it inherited through the acquisition of Palm Inc, into a leading connectivity platform. HP said that it has the potential to deliver more than 100 million webOS-enabled devices per year into the marketplace. The company will soon launch its TouchPad tablet and new smartphones running on WebOS, although Apotheker explained that the operating system will eventually cover PCs and even printers.
Apart from this, HP demonstrated a new real-time business analytics application that combines its computing platforms with the high-speed analytics technology it recently acquired through Vertica Systems. This new venture will allow HP’s customers to analyze their business performance, thereby facilitating decision making and streamlining operations.
Moreover, HP is focused on returning shareholder value and raised its quarterly dividend for the first time since 1998, by an attractive 50% to 12 cents a share from 8 cents. The increased dividend is expected some time in May. This will surely boost investor sentiment and can even drive share prices.
We will be watching Leo Apothekar’s strategic execution, particularly in the post-Hurd era. Leo’s predecessor Mark Hurd served a long tenure with HP. Under his leadership, the company made some important acquisitions and rationalized its workforce by 40,000, transforming the company from a basic computer and printer maker to a well diversified technology giant.
We remain encouraged with HP’s leading position in both PC and Server segments. But intense competition from other big technology companies, such as Cisco Systems Inc. (CSCO), Apple Inc. (AAPL), Microsoft Corp. (MSFT), as well as smaller Asian players keeps us concerned.
Currently, HP has a Zacks Rank #3, which translates into a short-term Hold recommendation.
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