HP's Fiorina sees muted economic recovery in 2003

WHITE SULPHUR SPRINGS, W.Va.: A recovery for the U.S. economy will likely be muted and more likely to take hold in 2003 than this year, Hewlett-Packard Co. chief Carly Fiorina said. HP will continue its capital investment but at lower levels than in previous years, she said on the sidelines of an annual Business Council meetings, a gathering of top executives.

"I think from our perspective we see a relatively muted recovery and it's probably 2003, not 2002," she told Reuters in an interview. Fiorina said HP's capital spending had remained steady and that it would continue to invest as necessary even as it captures cost savings from its merger with Compaq.

"We continue to invest in IT albeit at lower levels because we are merging two companies and we have duplication and redundancies and rationalization that needs to occur in our IT systems," she said. "We're making the capital investments we need to make." Fiorina said her company was in a better position because of its diverse offerings than rival Dell Computer Corp. despite that company's declaration that it has gained market share.

Dell needs "a growth strategy, they need it in part because their stock price is based upon their ability to double the size of their business in five years," she said. "A growth strategy is not simply taking share in a shrinking market that is consolidating."

HP, which touted its merger with Compaq as a way to compete with rivals such as IBM by offering corporations a full range of technology and services, already has a printing, imaging and storage business lines and offers professional services. "They are building the portfolio that we have," Fiorina commented on Dell.

On Wednesday, Dell said it was still gaining market share even though the economy was in a fragile state. Dell waged an aggressive price war last year to become the No. 1 PC maker but lost that spot in May to HP after it bought Compaq Computer after a bitter proxy fight. Dell officials have said they plan to regain its former leadership position in the third quarter.

Shares of HP closed up 7 cents to $11.97 on the NYSE while Dell shares closed down 2 cents to $25.30 on Nasdaq.

© Reuters