Barclays Capital’s Ben Reitzes this afternoon reports on a meeting he had in New York with investors and with Hewlett-Packard‘s (HPQ) chief financial officer, Cathie Lesjak to discuss some big-picture topics, such as strategic direction and the company’s “ability to meet earnings commitments.”
Reitzes, who has an “equal weight” rating on the shares and a $27 price target, writes that “Lesjak did a good job framing the key issues and discussing how the culture was benefitting from the leadership of new CEO Meg Whitman.”
Reitzes doesn’t spell out exactly what Lesjak had to say, but he offers some observations of his own: The company’s “Imaging and printing division,” or IPG, is seeing weakness in inkjet printing because of the move to more and more digital photo share. He expects the company will have further trouble with shipments of toner, and he expects a hit to the divisions margins in the April quarter as the company makes inventory adjustments to the channel.
HP needs to invest in making its services division more efficient, he writes, but actually the company will probably cut some fat from services in the near term.
And on that score, HP will need to find more places to cut in order to free up money to invest in sales personnel:
In order to fund these investments in sales, as well as an uptick in R&D, we believe HP will need to cut costs elsewhere. As a result, we wouldn�t be surprised to hear about some rolling restructuring measures into FY13 as HP begins this journey. It seems to us that sales force productivity is one of the major drivers of HP�s ability to win in the marketplace against competitors like IBM, EMC and Dell. As a result, we believe that potential upside from cost savings may be reinvested quickly in sales personnel into FY13.
HP shares today are up 32 cents, or 1.3%, at $24.68.
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