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HP CEO Whitman Says PC Demand Will Bounce Back

When Hewlett Packard CEO Meg Whitman was asked by CNBC Thursday where she saw the bottom when it comes to declining PC sales, she didn't quite say. But Whitman argued there are 140 million desktops and notebooks that are more than four years old. While acknowledging tablets might be growing faster, she said users will ultimately need full-fledged systems as well.

"People are still doing real work on their laptops, and tablets are great. But if you're doing Office or Excel or real creation, it's really hard to do that on your tablet," Whitman said the morning after reporting earnings for its second fiscal quarter.

"We're investing in hybrids where you have a laptop plus a tablet, where the screen comes off, so it's all in one. I think that's the direction the industry will go," Whitman said. "My view is people will want to create, they want to consume, they want to share, and I think that form factor will have a future." But she acknowledged: "The growth is tablets and smart phones, we're in to a whole new era in personal computing, there's no question about it."

Whitman said Windows-based PCs are no longer the only game in town. But nonetheless, she re-affirmed HP's commitment to the WinTel platform. The company yesterday also unleashed a new line of touch-based Windows 8 PCs including what it describes as mobile all-in-one desktop. Weighing in at 12-pounds, you probably wouldn't take this on the road but users can move the new ENVY Rove 20 from room to room.

Overall Whitman was in a better mood than usual yesterday. While HP's year-over-year revenues plummeted last quarter, the company stunned Wall Street with much better than expected earnings, leading to a 17 percent rise in its share price Thursday. HP became an instant darling after reporting a surprise $3.6 billion in cash flow from operations, up 44 percent.

Despite the jubilation, things still aren't exactly hunky-dory at HP's Palo Alto, Calif. headquarters, where personal systems revenues declined 20 percent, enterprise systems were down 10 percent, the services business dropped 8 percent and software was 3 percent lower.

As Whitman re-iterated, HP is 18 months into a five-year turnaround. At this point, things are slightly ahead of schedule but she's not celebrating yet. "I feel good about the growth prospects for 2014."

Posted by Jeffrey Schwartz on 05/24/2013 at 1:15 PM


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