HP Projects Over $100 Billion in Sales in Fiscal 2008
January 8, 2007 Timothy Prickett Morgan
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Hewlett-Packard was hosting its annual event with securities analysts in New York as we ended the publishing year, and the big news was that HP is now projecting that it will be the first information technology company to break through the $100 billion sales mark. This is probably not a case, like the four-minute mile, where once somebody does it, then others will follow. IBM is probably about the only other company that could break through this level, and with the divestitures IBM has made in recent years–spinning off its PC and disk drive businesses–it seems unlike that Big Blue will be breaking through the $100 billion level in 2007–unless it does a big acquisition or a lot of little ones. Mark Hurd, HP’s chief executive officer and, thanks to the pretexting scandal from a few months ago, now its chairman, told Wall Street that HP was on track to hit around $97 billion in sales in its fiscal 2007 year ending next October, and that it could grow another 4 percent to 6 percent in the following fiscal year. That means HP could hit anywhere from around $101 billion to $103 billion in sales in fiscal 2008. Hurd told Wall Street that he planned to do more cost cutting, because eking out that extra 4, 5, or 6 percent of revenue growth is very costly. That growth will come in part through acquisitions, by the way. But contrary to rumor, HP is probably not going to acquire security and systems software maker Symantec. Theoretically, Veritas was a good fit before Symantec shelled out $13.5 billion in stock to acquire the maker of high-end file systems and volume managers. But that price was just too high, particularly considering where HP’s stock price was at a year ago. And today, with Symantec having a market capitalization of over $19 billion, this is not the kind of deal that HP can stomach, even with $16.4 billion in cash in the bank, which HP has today. That is a lot of dough to pay for a $5 billion company.
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