Aspects of business that HP must set right
The decision of Hewlett Packard to merge its printer and PC businesses is not an idea that came to the company bigwigs overnight. The company was very much in favor of this sort of a merger since the time of former CEO Carly Fiorina. Although Mark Hurd, who preceeded Meg Whitman at the helm of HP,Â was totally against such a merger, he also contemplated the merger of these units near the end of his tenure. Now that the merger is very much in place, what Meg Whitman needs to think is the moves that HP needs to take to reawaken the business. According to the research note by Chris Whitmore, a Deutsche Bank analyst, there are certain aspects of business which HP needs to concentrate on.
Whitmore noted that the expenditure of HP in R&D is no way near the likes of IBM, Oracle or Cisco. In fact in the last six years, the company’s R&D spending has gone down by about 25 percent. Although it’s true that HP does not require to spend as much as its rivals in some aspects of its business as it depends on its partners Microsoft and Intel to do that for it, yet according to Whitmore, this strategy has failed since for three years in a row there has been no meaningful cash flow growth recorded by the company. It seems that there is a smartphone or tablet strategy that HP has, and the margins on PC sales remain tight. And to top it all, the services offered by the moneymaking printer division of the company are also not meeting the client expectations.
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