Walter Hewlett outlines plans for HP

11 February 2002 Walter Hewlett, board member at systems giant Hewlett-Packard and eldest son of company co-founder William Hewlett, has outlined his alternative strategic vision for the company.

Speaking to the Wall Street Journal, Hewlett outlined three guiding principles for strategic direction at HP, should he triumph in his battle against the company’s proposed acquisition of PC and server company Compaq.

First, he proposes that the company invest in and expand its highly profitable printer and imaging business. Second, he argues that HP should focus on filling in key gaps in its enterprise offerings, such as in software and consulting services, possibly through smaller acquisitions.

Finally, Hewlett suggests that HP should de-emphasize its personal computer business, possibly by closing some plants. “What HP needs is focus, not breadth,” Hewlett told the WSJ.

Hewlett denied that defeat for HP CEO Carly Fiorina over the acquisition would inevitably lead to a mass exodus among the company’s upper echelons, but he agreed that Fiorina would be forced to step down. “I don’t see how Carly could be effective if the merger is turned down, so I think it would be better if she left,” said Hewlett.

HP’s management has vociferously rejected Hewlett’s “alternative vision”. According to an HP spokeswoman, Mr Hewlett “is simply asking shareowners to disregard 2.5 years of planning, thought, and strategy, where every option was considered and rejected because it failed to create sufficient value, in favour of retreating and starting over.” Other managers at the company argue that without a strong PC business, HP would not be able to expand its printer and imaging unit.

With the shareholder vote set for 19 March, both sides are mounting vigorous campaigns to win the support of investors. Only two months ago, the deal seemed almost dead, after both families and family foundations of HP’s two co-founders said they would oppose the deal. But in recent weeks, HP’s management has regained momentum, gaining the support of both regulators in Europe and, it claims, its investors.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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