07 Hewlett Packard

Hewlett-Packard – 2008

Forest David: Francis Marion University

A. Case Abstract

Hewlett-Packard (www.hp.com) is a comprehensive business policy and strategic management case that includes the company’s fiscal year-end October 2007 financial statements, competitor information and more. The case time setting is the year 2008. Sufficient internal and external data are provided to enable students to evaluate current strategies and recommend a three-year strategic plan for the company. Headquartered in Palo Alto, California, Hewlett-Packard’s common stock is publicly-traded on the New York Stock Exchange under the ticker symbol HPQ.

Hewlett-Packard operates in five segments: Enterprise Storage and Servers, Services, Software, Personal Systems, Imagining and Printing, and Financial Services. The company has over 170,000 employees and is led by CEO Mark Hurd whose base pay was $14 million in 2007. The firm’s major competitors include Dell, IBM, Canon, Texas Instruments, and Apple.

B. Vision Statement (proposed)

To become recognized as the number one computer company in the world.

C. Mission Statement (proposed)

Hewlett-Packard is committed to being the best technology solutions provider to consumers, businesses and institutions globally by providing superior products and services for businesses and personal consumers (1,2). Our emphasis is based on domestic and global markets (3). We provide information technology systems to serve our customers more efficiently (4). We are dedicated to quality and consistency to maintain and gain customer loyalty (6). We are dedicated to growth and profitability (5) by treating employees (9) in ways that create extraordinary products for our customers, and that create high shareholder value, while maintaining a valued name throughout the computer and technology industry (8). Hewlett-Packard is synonymous with quality products and high customer satisfaction in every product and service that we provide (7).

1. Customer2. Products or services3. Markets4. Technology

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 84

5. Concern for survival, profitability, growth6. Philosophy7. Self-concept8. Concern for public image9. Concern for employees

D. External Audit

Opportunities

1. The worldwide personal computer industry posted its fourth consecutive year of double digit expansion in 2006, recording 10 percent unit growth.

2. PC shipments in the Asia-Pacific region expanded by an estimated 17.6 percent in 2006 on a unit basis.

3. IDC’s “rest of the world” category, which includes Eastern Europe, Latin America, and the Middle East rose 22 percent on a preliminary basis.

4. It is estimated that the PC industry will post total unit growth of approximately 11 percent for 2007.

5. Dell’s units sold declined 8.4 percent, so Dell’s market share fell by nearly 300 basis points on a year-over-year basis.

6. Over the past three years, Gateway’s gross margins narrowed from 14.4 percent in the first quarter of 2004 to 5.2 percent in the fourth quarter of 2006

7. During the fourth quarter of 2006, server market revenue grew by 5.2 percent.8. Dell achieved server market share of 9.4 percent on server revenue growth of 2.4

percent, down from 9.6 percent9. Worldwide revenues for servers were up 2.0 percent to $52.3 billion.10. In the first quarter of 2006, IBM’s server revenue growth of 3.8 percent put its market

share at 37.9 percent, down from 38.4 percent the comparable year-earlier quarter.

Threats

1. IBM maintained its position as the leader in overall server market revenues in 2006.2. PC unit shipments in the U.S. declined 0.5 percent in the fourth quarter of 2006.3. During the fourth quarter of 2006, Apple grew its units by 31.8 percent in the U.S.

market.4. Sun’s server market share was 9.7 percent in the fourth quarter of 2006, up from 8.2

percent a year earlier.5. Apple’s switch in 2006 to Intel-based chips increased the processing power of Macs.6. IBM’s server factory revenues increased 0.8 percent.7. Sun Microsystems’s server factory revenues increased 11.2 percent.8. Apple’s improvement in the U.S. market share from 3.3 percent in 2004 to 4.0

percent in 2005, and then to 4.2 percent in 2006.9. IBM’s high-end sever market share rose to 57.2 percent from 53.6 percent as

revenues improved by 6.6 percent.


10. Sun Microsystems’s low-end server market share expanded 60 basis points to 8.2 percent.

CPM – Competitive Profile Matrix

Hewlett-Packard Dell IBMCritical Success Factors

Weight Rating Weighted Score

Rating Weighted Score

Rating Weighted Score

Market SharePriceFinancial PositionProduct QualityProduct LinesConsumer LoyaltyEmployees

0.200.100.200.150.100.200.05

3333434

0.600.300.600.450.400.600.20

2333222

0.400.300.600.450.200.400.10

3244434

0.600.200.800.600.400.600.20

TOTAL 1.00 3.15 2.45 3.40

External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted ScoreOpportunities1. The worldwide personal computer industry

posted its fourth consecutive year of double digit expansion in 2006, recording 10 percent unit growth.

0.07 4 0.28


0.06 3 0.18


0.05 2 0.10


0.08 4 0.32

5. Dell’s units sold declined 8.4 percent, so Dell’s market share fell by nearly 300 basis points on a year-over-year basis.

0.07 3 0.21


0.07 3 0.21

7. During the fourth quarter of 2006, server market revenue grew by 5.2 percent.

0.06 3 0.18

8. Dell achieved server market share of 9.4 percent on server revenue growth of 2.4 percent, down from 9.6 percent

0.04 2 0.08

9. Worldwide revenues for servers were up 2.0 percent to $52.3 billion.

0.05 2 0.10

10. In the first quarter of 2006, IBM’s server revenue growth of 3.8 percent put its market share at 37.9 percent, down from 38.4 percent

0.05 2 0.10


the comparable year-earlier quarter.

Threats1. IBM maintained its position as the leader in

overall server market revenues in 2006.0.09 1 0.09

2. PC unit shipments in the U.S. declined 0.5 percent in the fourth quarter of 2006.

0.01 2 0.02

3. During the fourth quarter of 2006, Apple grew its units by 31.8 percent in the U.S. market.

0.05 2 0.10

4. Sun’s server market share was 9.7 percent in the fourth quarter of 2006, up from 8.2 percent a year earlier.

0.04 2 0.08

5. Apple’s switch in 2006 to Intel-based chips increased the processing power of Macs.

0.02 2 0.04

6. IBM’s server factory revenues increased 0.8 percent.

0.02 2 0.04

7. Sun Microsystems’s server factory revenues increased 11.2 percent.

0.03 2 0.06

8. Apple’s improvement in the U.S. market share from 3.3 percent in 2004 to 4.0 percent in 2005, and then to 4.2 percent in 2006.

0.03 3 0.09

9. IBM’s high-end sever market share rose to 57.2 percent from 53.6 percent as revenues improved by 6.6 percent.

0.07 2 0.14


0.04 2 0.08

TOTAL 1.00 2.50

E. Internal Audit

Strengths

1. HP’s unit growth was an impressive 23.8 percent, significantly outpacing the second and third-place vendors

2. In November 2006, HP completed the acquisition of Mercury Interactive Corp., a provider of software and services, for $4.5 billion.

3. HP’s net property, plant, and equipment increased from $6.5 billion in 2005 to $6.9 billion in 2006.

4. HP’s worldwide PC shipments market share increased in 2006 to 17 percent from 15.7 percent in 2005.

5. HP experienced a 8.4 percent increase in worldwide volume server market share.6. HP’s high-end server revenues increased 2.4 percent.7. HP remained in the number 1 spot in the fourth quarter of 2006, according to IDC,

and gained more than 200 basis points of market share on a year-over-year basis, ending the period at 18.1 percent.

8. In the U.S., HP’s market share rose to 24.0 percent from 20.6 percent.9. HP’s server revenue growth was 5.1 percent in the fourth quarter of 2006.10. HP’s non-U.S. net revenue rose from $56.1 billion in 2005 to 59.4 billion in 2006.


Weaknesses

1. HP’s worldwide midrange server market share decreased 21.3 percent in 2006.2. HP ceded 100 basis points of server market share, to 26.8 percent.3. Local labor conditions and regulations4. HP’s return on equity is 18.55 percent, while the return in equity of the industry

leader in return on equity is 38.93 percent.5. Managing a geographically dispersed workforce6. HP’s long-term debt/equity is 0.233, while the long-term debt/equity of the industry

leader in long-term debt/equity is 1.689.7. HP’s server vendor market share dropped from 26.9 percent in 2005 to 26.8 percent

in 2006.8. Over 60 percent of overall net revenue in 2006 came from outside of the U.S.9. Longer accounts receivable cycles10. HP’s long-term growth rate (5 yrs) is 13.82 percent, while the long-term growth rate

of the industry leader in long-term growth is 22.62 percent.

Financial Ratio Analysis (October 2007)

Growth Rates % Hewlett-Packard Industry SP-500Sales (Qtr vs year ago qtr) 15.20 11.70 12.10Net Income (YTD vs YTD) 17.20 29.80 16.40Net Income (Qtr vs year ago qtr) 27.50 22.60 12.00Sales (5-Year Annual Avg.) 13.01 7.63 13.12Net Income (5-Year Annual Avg.) NA 7.68 20.25Dividends (5-Year Annual Avg.) 0.00 10.98 9.94Price RatiosCurrent P/E Ratio 16.2 15.7 20.4P/E Ratio 5-Year High NA 2.9 23.8P/E Ratio 5-Year Low NA 1.5 6.1Price/Sales Ratio 1.06 1.29 2.37Price/Book Value 2.91 4.08 3.39Price/Cash Flow Ratio 11.10 5.00 10.60Profit MarginsGross Margin 24.4 35.2 34.1Pre-Tax Margin 8.8 11.8 17.8Net Profit Margin 7.0 8.8 12.65Yr Gross Margin (5-Year Avg.) 24.4 33.6 34.35Yr PreTax Margin (5-Year Avg.) 6.2 9.3 16.45Yr Net Profit Margin (5-Year Avg.) 5.0 6.6 11.4Financial ConditionDebt/Equity Ratio 0.21 0.77 1.14Current Ratio 1.2 1.2 1.1Quick Ratio 1.0 1.1 0.8Interest Coverage NA 11.6 42.3Leverage Ratio 2.3 3.3 4.0Book Value/Share 14.93 17.50 19.13


Investment Returns %Return On Equity 19.0 27.8 24.6Return On Assets 8.5 8.7 7.4Return On Capital 15.2 14.7 9.9Return On Equity (5-Year Avg.) 11.6 19.5 18.3Return On Assets (5-Year Avg.) 5.6 6.2 6.2Return On Capital (5-Year Avg.) 9.3 10.0 8.3Management EfficiencyIncome/Employee 42,233 18,434 90,463Revenue/Employee 606,314 268,908 800,790Receivable Turnover 7.1 4.9 14.1Inventory Turnover 10.0 4.7 7.6Asset Turnover 1.2 1.0 0.8Adapted from www.moneycentral.msn.com

Date Avg. P/E Price/Sales Price/Book Net Profit Margin (%)10/07 16.50 1.35 3.46 7.010/06 15.00 1.21 2.77 6.810/05 27.80 0.94 2.14 2.810/04 18.30 0.71 1.45 4.410/03 22.90 0.94 1.80 3.5

Date Book Value/ Share Debt/Equity ROE (%) ROA (%) Interest Coverage10/07 $14.93 0.21 18.9 8.2 16.410/06 $13.96 0.14 16.2 7.6 19.510/05 $13.10 0.14 6.5 3.1 10.110/04 $12.90 0.19 9.3 4.6 16.810/03 $12.40 0.20 6.7 3.4 10.5

Adapted from www.moneycentral.msn.com

Net Worth Analysis (October 2007 in millions)

1. Stockholders’ Equity + Goodwill = 38,500 + 21,700 $ 60,2002. Net income x 5 = $7,200 x 5= $ 36,0003. Share price = $43.00/EPS 2.68 =$16.04 x Net Income $7,200= $ 115,5004. Number of Shares Outstanding x Share Price = 2,550 x $43.00 = $ 109,650Method Average $80,337

Internal Factor Evaluation (IFE) Matrix

Key Internal Factors Weight Rating WeightedScore

Strengths1. HP’s unit growth was an impressive 23.8 percent,

significantly outpacing the second and third-place vendors

0.07 4 0.28


0.08 4 0.32


0.04 3 0.12

4. HP’s worldwide PC shipments market share increased in 2006 to 17 percent from 15.7 percent in 2005.

0.08 4 0.32


5. HP experienced a 8.4 percent increase in worldwide volume server market share.

0.07 3 0.21

6. HP’s high-end server revenues increased 2.4 percent. 0.04 3 0.12

7. HP remained in the number 1 spot in the fourth quarter of 2006, according to IDC, and gained more than 200 basis points of market share on a year-over-year basis, ending the period at 18.1 percent.

0.03 3 0.09

8. In the U.S., HP’s market share rose to 24.0 percent from 20.6 percent.

0.05 4 0.20

9. HP’s server revenue growth was 5.1 percent in the fourth quarter of 2006.

0.06 3 0.18

10. HP’s non-U.S. net revenue rose from $56.1 billion in 2005 to 59.4 billion in 2006.

0.06 4 0.24

Weaknesses1. HP’s worldwide midrange server market share decreased

21.3 percent in 2006.0.09 1 0.09

2. HP ceded 100 basis points of server market share, to 26.8 percent.

0.06 2 0.12

3. Local labor conditions and regulations 0.01 2 0.024. HP’s return on equity is 18.55 percent, while the return

in equity of the industry leader in return on equity is 38.93 percent.

0.06 1 0.06

5. Managing a geographically dispersed workforce 0.01 2 0.026. HP’s long-term debt/equity is 0.233, while the long-term

debt/equity of the industry leader in long-term debt/equity is 1.689.

0.03 1 0.03

7. HP’s server vendor market share dropped from 26.9 percent in 2005 to 26.8 percent in 2006.

0.01 1 0.01

8. Over 60 percent of overall net revenue in 2006 came from outside of the U.S.

0.08 1 0.08

9. Longer accounts receivable cycles 0.02 2 0.0210. HP’s long-term growth rate (5 yrs) is 13.82 percent,

while the long-term growth rate of the industry leader in long-term growth is 22.62 percent.

0.05 1 0.05

TOTAL 1.00 2.58

F. SWOT Strategies

SO Strategies

1. Focus advertising of the Blackbird gaming PC in the Asia-Pacific region (S4, S10, O1, O2, O4).

2. Increase advertising by $200 million in Eastern Europe and Latin America (S4, S10, O1, O3, O4).

WO Strategies

1. Design and introduce a competitive and highly functional midrange server (W1, O9).2. Offer $500 million in rebates to businesses for purchasing and using HP products.


ST Strategies

1. Allocate $200 million extra for advertising budget in the in the US (S8, T2).2. Offer $200 million in rebates to customers to give further incentives to buy HP

computers (S3, S8, T2).

WT Strategies

1. Open 50 new HP stores in major metropolitan areas (W8, T2).2. Develop an high-end server to increase serve market share and compete with IBM

(W2, T1, T6, T9).

G. SPACE Matrix


6

5

4

3

2

1

-6 -5 -4 -3 -2 -1 1 2 3 4 5 6-1

-2

-3

-4

-5

-6Competitive

IS

ES

CA

FSConservative Aggressive

Defensive

Return on Assets (ROA) 5 Rate of Inflation -3Leverage 6 Technological Changes -5Net Income 6 Price Elasticity of Demand -2Income/Employee 5 Competitive Pressure -6Inventory Turnover 6 Barriers to Entry into Market -3

5.6 -3.8Environmental Stability (ES) Average Financial Strength (FS) Average

Environmental Stability (ES)Financial Strength (FS)

Market Share -2 Growth Potential 6Product Quality -2 Financial Stability 6Customer Loyalty -3 Ease of Entry into Market 5Technological know-how -2 Resource Utilization 5Control over Suppliers and Distributors -2 Profit Potential 6

-2.2 5.6Competitive Advantage (CA) Average Industry Strength (IS) Average

Competitive Advantage (CA) Industry Strength (IS)

x-axis: -2.2 + 5.6 = 3.4y-axis: 5.6 + -3.8 = 1.8Coordinate: (3.4, 1.8)

H. Grand Strategy Matrix


Rapid Market Growth

Quadrant II Quadrant I

Strong Competitive

Position

Slow Market Growth

Weak Competitive

Position

Quadrant III Quadrant IV

I. The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong Average Weak3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III

3.0 to 3.99

Medium IV V VI


The EFE Total Weighted Score

2.0 to 2.99

Hewlett- Packard

Low VII VIII IX

1.0 to 1.99

Hold and Maintain

Product Segment Percent RevenuePersonal Systems 49Imagining & Printing 29Enterprise Storage Servers 19Financial Services 2Software 1

J. QSPM

Strategic Alternatives

Key Internal Factors WeightIncrease advertising budget worldwide

Open 50 HP stores in US

Strengths AS TAS AS TAS1. HP’s unit growth was an impressive 23.8 percent,

significantly outpacing the second and third-place vendors

0.07 2 0.14 1 0.07


0.08 2 0.16 1 0.08


0.04 2 0.08 3 0.12

4. HP’s worldwide PC shipments market share increased in 2006 to 17 percent from 15.7 percent 0.08 4 0.32 2 0.16


in 2005.5. HP experienced a 8.4 percent increase in

worldwide volume server market share.0.07 4 0.28 2 0.14

6. HP’s high-end server revenues increased 2.4 percent.

0.04 --- --- --- ---

7. HP remained in the number 1 spot in the fourth quarter of 2006, according to IDC, and gained more than 200 basis points of market share on a year-over-year basis, ending the period at 18.1 percent.

0.03 --- --- --- ---

8. In the U.S., HP’s market share rose to 24.0 percent from 20.6 percent.

0.05 2 0.10 3 0.15

9. HP’s server revenue growth was 5.1 percent in the fourth quarter of 2006.

0.06 --- --- --- ---

10. HP’s non-U.S. net revenue rose from $56.1 billion in 2005 to 59.4 billion in 2006.

0.06 3 0.18 1 0.06

Weaknesses1. HP’s worldwide midrange server market share

decreased 21.3 percent in 2006.0.09 3 0.27 1 0.09

2. HP ceded 100 basis points of server market share, to 26.8 percent.

0.06 3 0.18 1 0.06

3. Local labor conditions and regulations 0.01 --- --- --- ---4. HP’s return on equity is 18.55 percent, while the

return in equity of the industry leader in return on equity is 38.93 percent.

0.06 --- --- --- ---

5. Managing a geographically dispersed workforce 0.01 --- --- --- ---6. HP’s long-term debt/equity is 0.233, while the

long-term debt/equity of the industry leader in long-term debt/equity is 1.689.

0.03 2 0.06 4 0.12

7. HP’s server vendor market share dropped from 26.9 percent in 2005 to 26.8 percent in 2006.

0.01 --- --- --- ---

8. Over 60 percent of overall net revenue in 2006 came from outside of the U.S.

0.08 4 0.32 1 0.08

9. Longer accounts receivable cycles 0.02 --- --- --- ---10. HP’s long-term growth rate (5 yrs) is 13.82

percent, while the long-term growth rate of the industry leader in long-term growth is 22.62 percent.

0.05 --- --- --- ---

SUBTOTAL 1.00 2.09 1.13

Key External Factors Weight Increase advertising budget worldwide

Open 50 HP stores in US

Opportunities AS TAS AS TAS1. The worldwide personal computer industry posted its

fourth consecutive year of double digit expansion in 2006, recording 10 percent unit growth.

0.07 4 0.28 2 0.14


0.06 4 0.24 1 0.06


0.05 4 0.20 1 0.05


0.08 2 0.16 4 0.32

5. Dell’s units sold declined 8.4 percent, so Dell’s


market share fell by nearly 300 basis points on a year-over-year basis.

0.07 --- --- --- ---


0.07 --- --- --- ---

7. During the fourth quarter of 2006, server market revenue grew by 5.2 percent.

0.06 --- --- --- ---

8. Dell achieved server market share of 9.4 percent on server revenue growth of 2.4 percent, down from 9.6 percent

0.04 --- --- --- ---

9. Worldwide revenues for servers were up 2.0 percent to $52.3 billion.

0.05 4 0.20 1 0.05

10. In the first quarter of 2006, IBM’s server revenue growth of 3.8 percent put its market share at 37.9 percent, down from 38.4 percent the comparable year-earlier quarter.

0.05 --- --- --- ---

Threats1. IBM maintained its position as the leader in overall

server market revenues in 2006.0.09 2 0.18 3 0.27

2. PC unit shipments in the U.S. declined 0.5 percent in the fourth quarter of 2006.

0.01 2 0.02 4 0.04

3. During the fourth quarter of 2006, Apple grew its units by 31.8 percent in the U.S. market.

0.05 --- --- --- ---

4. Sun’s server market share was 9.7 percent in the fourth quarter of 2006, up from 8.2 percent a year earlier.

0.04 --- --- --- ---

5. Apple’s switch in 2006 to Intel-based chips increased the processing power of Macs.

0.02 --- --- --- ---

6. IBM’s server factory revenues increased 0.8 percent. 0.02 --- --- --- ---7. Sun Microsystems’s server factory revenues

increased 11.2 percent.0.03 --- --- --- ---

8. Apple’s improvement in the U.S. market share from 3.3 percent in 2004 to 4.0 percent in 2005, and then to 4.2 percent in 2006.

0.03 --- --- --- ---

9. IBM’s high-end sever market share rose to 57.2 percent from 53.6 percent as revenues improved by 6.6 percent.

0.07 --- --- ---


0.04 --- --- --- ---

SUBTOTAL 1.28 0.93SUM TOTAL ATTRACTIVENESS SCORE 3.37 2.06

K. Recommendations

The QSPM strategies assessed whether increasing the advertising budget by $400 million or opening 50 Hewlett Packard stores was the better alternative. The QSPM revealed increasing advertising to focus on current markets was the most effective strategy. However, it is still feasible to suggest opening 50 new HP stores at an initial cost of $250 million.


L. EPS/EBIT Analysis

$ Amount Needed: 650MStock Price: $43Tax Rate: 35%Interest Rate: 5%# Shares Outstanding: 2,550M

Recession Normal Boom Recession Normal Boom

EBIT 2,000,000,000 8,000,000,000 12,000,000,000 2,000,000,000 8,000,000,000 12,000,000,000Interest 0 0 0 32,500,000 32,500,000 32,500,000EBT 2,000,000,000 8,000,000,000 12,000,000,000 1,967,500,000 7,967,500,000 11,967,500,000Taxes 700,000,000 2,800,000,000 4,200,000,000 688,625,000 2,788,625,000 4,188,625,000EAT 1,300,000,000 5,200,000,000 7,800,000,000 1,278,875,000 5,178,875,000 7,778,875,000# Shares 2,515,116,279 2,515,116,279 2,515,116,279 2,500,000,000 2,500,000,000 2,500,000,000EPS 0.52 2.07 3.10 0.51 2.07 3.11

Common Stock Financing Debt Financing

70 Percent Stock - 30 Percent Debt 70 Percent Debt - 30 Percent StockRecession Normal Boom Recession Normal Boom

EBIT 2,000,000,000 8,000,000,000 12,000,000,000 2,000,000,000 8,000,000,000 12,000,000,000Interest 9,750,000 9,750,000 9,750,000 22,750,000 22,750,000 22,750,000EBT 1,990,250,000 7,990,250,000 11,990,250,000 1,977,250,000 7,977,250,000 11,977,250,000Taxes 696,587,500 2,796,587,500 4,196,587,500 692,037,500 2,792,037,500 4,192,037,500EAT 1,293,662,500 5,193,662,500 7,793,662,500 1,285,212,500 5,185,212,500 7,785,212,500# Shares 2,510,581,395 2,510,581,395 2,510,581,395 2,504,534,884 2,504,534,884 2,504,534,884EPS 0.52 2.07 3.10 0.51 2.07 3.11

M. Epilogue

On January 31, 2008, HP unveiled at the Photo Marketing Association (PMA) tradeshow several retail photo printing solutions and services that provide consumers with tools to personalize their photos and publish customized creative output. With three major analog-to-digital conversion processes already underway – in film, telephony and TV – and as more analog processes such as book publishing are converted to digital, the growth of digital content is exploding. According to industry analyst firm IDC, the information added annually to the “digital universe” is expected to increase more than 600% from 161 billion gigabytes to 988 billion gigabytes between 2006 and 2010. In 2006 alone, the amount of digital information created, captured and replicated was approximately 3 million times the information in all the books ever written. This is a


major opportunity for HP. “Put simply, we want our customers to be able to bring rich content to life,” said David Murphy, senior vice president, Web Services and Software Business, HP. “In combining our printing franchise with a world-class set of software and web assets, HP is creating a multibillion-dollar business poised to lead the transformation to a comprehensive digital supply chain – from content creation and management to publishing and consumption.” Nowhere is the disconnect between digital content creation and publishing more prevalent than in the digital photography market, where the difference between the number of images captured and those that are actually published or printed is vast and growing. To bridge this gap, HP now offers the new HP Photo Center to personalize their photos and publish customized creative content. In the retail photo environment, the company is working to transform retailers’ traditional photo labs into digital publishing centers that move beyond prints to rich digital media, such as photo books, posters, calendars and other creative photo products.

HP also just began offering its Snapfish by HP members the ability to order posters online to be picked up the same day at any of Staples’ 1,400 “Copy and Printer Centers” nationwide. Staples is the first nationwide retailer to offer this service. Starting at $14.99,(3) the posters will be printed in-store on HP Designjet printers and offered in two sizes – 16 x 20 inches and 20 x 30 inches. Customers will have the choice of using a single image or creating a collage of up to 30 images, and they can add a title as well as select from up to 14 background colors. Between 2004 and 2007, the web-to-retail market in the United States grew more than 1,200 percent to more than 1.2 billion prints, according to internal HP data. In 2007, the Snapfish network of online photo sites generated more than 1 billion of those 1.2 billion web-to-store prints.

For doing a fantastic job, Hewlett-Packard Co. CEO Mark Hurd received compensation of $26 million for the 2007 fiscal year, reflecting the board's satisfaction with HP's aggressive sales growth and cost-cutting moves. Hurd, 51, took home $1.4 million in base salary, another $1.4 million in bonus money and nearly $12 million in cash incentive payouts. In addition, Hurd made $4.8 million on stock options he exercised, and he had $7.4 million worth of HP stock vested during the latest period.

The document noted that the pay for Hurd and other executives was increased because the company beat its financial targets in all business segments in 2007, despite aggressive goals set by the board after an especially prosperous period the year before. In nearly three years as CEO, Hurd has guided HP to a number of significant milestones, including recapturing the title of world's biggest PC seller from rival Dell Inc. and cracking $100 billion in annual sales for the first time. HP Profits have more than tripled under Hurd's leadership, rising to $7.26 billion in fiscal 2007. HP has cut costs by consolidating data centers and corporate offices and aggressively slashed nearly 15,000 jobs in a massive restructuring launched shortly after Hurd's arrival as CEO and completed in October 2007. Some 3,000 more employees left the company as part of an early retirement program that HP initiated last year. Since Hurd took the reins of HP in April 2005, the company's stock price has more than doubled, from around $20 to more than $40 today, a rise that has created more than $50 billion in additional shareholder wealth.


In addition, in early 2008, HP unveiled two new energy-efficient business desktop PCs. The HP Compaq dc7800 Ultra-slim Desktop PC, with solid-state hard drive for improved reliability, and the Compaq dc5800 Business PC include a variety of environmentally-friendly features that allow them to qualify for the Electronic Product Environmental Assessment Tool (EPEAT) Gold registry. The EPEAT registry helps businesses evaluate and select technology products based on their environmental attributes. Priced at $1258, the dc7800 Ultra-slim Desktop PC's solid-state hard drive provides near instantaneous access to data and eliminates moving parts, which are the main cause of electromechanical wear. It also offers a faster system start, better reliability, improved power efficiency, shock improvement and a smaller overall footprint. Starting as low as $579, the dc5800 Business Desktop PC, available in redesigned small form factor and microtower PC designs, offers a range of productivity tools and security features. "HP's ongoing efforts to design for the environment have spanned decades," Alan Reed, vice president and general manager of personal systems group at HP, said in a statement.


07 Hewlett Packard

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