Whitman’s Simple Vision: Hewlett-Packard Has Work to Do

LAS VEGAS — Meg Whitman has a clear vision of Hewlett-Packard making radically new consumer products. She sees it selling cloud computing technologies that she hopes will attract fast-growing start-ups to the venerable brand. She wants to transform its printing and services businesses. Much of the promise is on show at a big show for corporate clients in Las Vegas this week.

The only thing standing in her way is the present state of H.P.

“Back down to reality, we’ve got a $125 billion business with work to do,” Ms. Whitman said in an interview during the show. “We have to get the existing parts back on track.”

She denied that Hewlett-Packard is in crisis. She said, “We have got to build up the balance sheet.” But Ms. Whitman also rejected the notion that H.P., which last year paid over $10 billion for a software company, was heading for a cash crunch. Much of the immediate problem, she said, could be fixed by working on things like getting faster payments on its sales. Somewhat longer term, she hopes to attract enterprise customers looking for ways to make a gradual transition to cloud computing.

However successful she is at remaking H.P., however, it is clear that the revival will first involve a couple of very tough years, as old businesses are reconfigured and new ones prepared. She also indicated she is in for the long haul, thanks in part to her failed bid for governor of California.

“I am much tougher” for the experience, she said. “My communication skills are much improved.” The campaign also left her with considerable distaste for the press, she indicated.

Ms. Whitman said that there is no hit consumer product in the offing. Rather she is making “a big bet” on corporate sales of laptops and personal computers when Microsoft’s Windows 8 operating system comes out, probably around September. The company made a big bet on tablets under Mark V. Hurd and failed in that effort under Léo Apotheker. It has never been able to make a popular phone. Looking further out in consumer devices, she said, “you’ll see a lot of new form factors that no one has contemplated yet.” She could not say, however, whether these would be available in time for the holidays, or a year from now.

Of all Hewlett-Packard’s businesses that Ms. Whitman discussed, only networking (which had revenues of $2.5 billion in 2011) was not described as a glass half-full. Printing is having “a secular decline in some types,” but she was optimistic about digital industrial printing, a business H.P. has tried to crack for years. Data storage “in total does not look like super rapid growth,” because of a diminishing demand for older forms; the new types of networked storage are selling well. Selling servers “is one competitive business,” she said.

Even the recently-announced layoff of 27,000 employees, about 8 percent of the company’s work force, was described as tough work, since Mr. Hurd took out so many people when he ran H.P. from 2005 to 2010. “The easy back-end efficiency — human resources, information technology, legal, finance — Mark already did,” she said.

Her cuts are “bottom up,” she said, through a process of early retirement, a slowdown in hiring, and getting out of businesses that will not yield growth. “It’s very strategic,” she said. “What are some things we are doing that are not going to be major businesses?”

Ms. Whitman’s long, slow plan may be why Hewlett-Packard’s stock is off 8 percent since she took over the company nearly nine months ago. But it may also be why but no one is calling for her head; few think this tech giant can be moved much quicker.

Early in her tenure, Ms. Whitman evaluated whether or not to spin off Hewlett-Packard’s PC business, an idea first promoted by her predecessor, Mr. Apotheker. She decided not to do that, but instead folded the printing division into the PC division. She said there is no major part of the company she plans to sell or close down. H.P. recently hired a former private equity executive, George Kadifa, to lead its software operations, a move that, given his background, indicated he might work on paring down the company. Ms. Whitman described him as “a gem,” with “a sense of what’s going on in the world.” She says those are abilities that give H.P. a better sense of what it needs to buy.

Ms. Whitman’s vision for Hewlett-Packard’s corporate business, delivered Tuesday in Las Vegas, combines cloud computing, security and data analysis. On the consumer and individual corporate side, she wants to make devices that are connected to the cloud with a high level of security, which work well with other H.P. products. New growth areas include a service called “HP ePrint” that enables secure printing at retail outlets like FedEx Office, and cloud-based sales for other businesses.

In terms of providing technology to cloud-based start-ups, she said, “we have a lot of work to do on that.” But she pointed to recent efforts like low-energy data center servers based on cellphone chips. Cloud computing “is a huge opportunity for us,” she said, “as big as client-server.”