When Mark Hurd was appointed chief executive of Hewlett-Packard (HP) almost four months ago, he said he would improve the computer and printer maker's strategy as opposed to shifting it. Yesterday, in his first big move at HP, Mr Hurd delivered as promised.
In a move designed to save the company $1.9 billion (€1.58 billion) a year and help HP get its cost structure in line with rivals such as Dell, the world's leading PC maker, Mr Hurd announced that HP would slash 14,500 jobs.
Observers noted that Mr Hurd's move did little to shift the company's strategy of competing across a broad range of markets, from PCs and printers to corporate servers and consulting.
His immediate aim has been to simplify HP's business.
"This was the triage," said Frank Gillett, an analyst at Forrester. "But Mark Hurd still has more work to do."
Few would argue that those changes were unnecessary. HP has struggled to go on the offensive since Carly Fiorina, the group's former chief executive, bought Compaq Computer for $19 billion in 2002.
The controversial deal was supposed to give HP the weight it needed to compete against IBM's high-end services business and Dell's low-cost PC operations. But HP's results have failed to measure up.
Mr Hurd plans to dissolve its unwieldy standalone sales organisation and trim support staff. By folding sales staff into HP's corporate computing unit as well as its PC operations and printing division, Mr Hurd aims to reduce the level of duplication that has bogged down the company.
Mr Hurd's efforts to simplify HP's sales structure are consistent with recent changes, where he divided the PC and printer businesses and split the global operations portfolio and chief information officer role.
Analysts applauded Mr Hurd's move but some said there were a few issues unresolved. For example, it was not clear that HP's cuts would go deep enough to enable it to better compete.
"If you benchmark them right next to Dell the answer is 'no' because Dell doesn't do the R&D that HP does. Does this move them closer in cost competitiveness to IBM? Yes," said Crawford del Prete, analyst at market researcher IDC.
Others noted that Mr Hurd had not clarified how HP would differentiate itself from its biggest rivals.
"My concern is that they haven't differentiated themselves. They need to clarify their identity and strategy. They have listened to their dedicated customers as opposed to the ones on the fence, the ones they need to grow," said Mr Gillett.
