Post-merger HP making impressive progress

SAN FRANCISCO: Market research firm International Data Corp. said a survey of HP customers and partners showed that more 50 percent of them reported no change in their experience with the company. That finding could help to allay fears that customers might defect to competitors as HP combined the two companies.

IDC analysts, in a conference call to give a progress report on one of the most hotly contested mergers in the technology industry, also said HP has made good progress in paring losses in its PC and server units. "HP is off to a strong start," said IDC analyst Crawford Del Prete on the conference call. "While customer feedback is strong, now the really hard work begins."

IDC noted that the $19 billion merger, which closed in May, is also another indicator of a consolidating server and personal computer market. Only five major players in the server market remain, comprising HP, International Business Machines Corp., Dell Computer Corp. and Fujitsu Ltd., IDC said.

IDC also said that HP's market-share performance was better than it had expected, given historical trends of what happens when technology companies merge. The only exception was the handheld computer segment, IDC said.

Last month, HP posted a fiscal fourth-quarter profit that met the most bullish Wall Street forecasts and is realizing more merger-related savings more quickly than expected. The company now expects to see the remaining savings under its $3 billion cost-cutting plan a year ahead of schedule.

In HP's personal systems group, which includes PCs and notebook computers, HP posted an operating loss of $87 million, narrower than the $100 million operating loss many analysts had expected.

In its enterprise systems group, which includes servers and its highest-end computer called Superdome, HP had an operating loss of $152 million, again less than analysts had forecast. HP has used the merger as a springboard to become a one-stop shop for companies' technology needs, with the ability to stitch together PCs, servers, software, data storage into complete computer systems, aiming to better compete against chief rival IBM.

However, when customers and partners in the survey were asked "how clearly has HP articulated a vision of its product and services offerings in their communications with you since the merger," the largest group of responses -- at 35 percent -- responded that HP had done a "poor" job. Some 30 percent of respondents gave HP "fair" marks.

HP executives are making a clearer case to customers, recently kicking off a global advertising campaign anchored with the phrase, "Everything is possible," analysts said. Palo Alto, California-based HP also recently hosted a financial analyst meeting, where executives made thorough presentations on HP's main business units with cohesive themes, noting the importance of partnering with customers.

In preparing its progress report, IDC said it conducted more than 1,000 interviews with HP customers and distribution channel partners. HP officials could not immediately be reached to comment on whether it had commissioned the report.

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