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HP ‘not messing about’ as it takes on tablet market again

James Hutchinson (via AFR) | March 25, 2013
Global technology giant HP says it is "not messing around" with its re-entry into the tablet market, despite spectacularly failing in the space 18 months ago.

But HP has effectively ditched all future support for webOS, after recently selling the software to Korean television maker LG.

Mr Veghte was briefly in Australia last week to meet with local staff and more than 50 customers including the Commonwealth Bank, which Ms Whitman also visited last year amid fears the company could lose its long-standing contract with the bank.

He said the company was looking to convince its customers that HP remained a "steady hand" after several years of confusing strategy and poor performance among some sectors of the business.


Mr Veghte, who joined HP in 2010 after 19 years at Microsoft, was appointed chief operating officer mid-last year as part of a restructure set in place by Ms Whitman.

His position as COO has seen Mr Veghte take over the internal processes involved in the turnaround, including plans to lay off 29,000 staff, or almost ten per cent, of global staff.

But the company's claims of a solid strategy has not always sat well with investors, who last week attempted to vote off five members of the board, including chairman Raymond Lane.

Much consternation has focused around HP's often-confused internal and acquisition strategies, which has seen it focus heavily on software products under Mr Apotheker at the cost of its PC division, only to switch paths again under his successor Ms Whitman, a former eBay CEO and one-time gubernatorial candidate.

The company spent more than $US1 billion acquiring Palm on the promise of a smartphone revival, as well as $US11 billion on software maker Autonomy, on which HP was later forced to write down four-fifths of the value over allegations of accounting fraud.

Mr Veghte said he believed Autonomy was a good acquisition for HP, albeit at a much smaller cost. He also pointed to other acquisitions such as Compaq, 3PAR, 3COM and ArcSight as evidence the company has not always faltered in its mergers and acquisitions.

But another billion-dollar acquisition is unlikely for HP in the short-term.

"We have to make sure that we are doing incredible due diligence in any M&A going forward and we have to make sure that's the best use of shareholder's money," he said. "Our capital allocation strategy for our free cashflow in FY13 is pay down the debt."

A re-entry into tablets and potentially smartphones is part of HP's attempt to transition away from those troubled years.

Mr Veghte defended HP's progress as successful to date, while taking swipes at major rivals Cisco as unsustainable and IBM as "ageing".

"We have an innovation engine, a strategy and we're beating the expectations in the first quarter by nearly 16 per cent," he said.


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