HP beats expectations, but CEO cautious

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Watching the Rule of reduction at work

The Rule of reduction:
If a company has a problem, the preferred approach is to get rid of the people who can solve the problem.

Let's take HP and printers.

Here is Mr. Hurd:
Among his top priorities: "driving printing and imaging forward..."

Here is his approach:
The company, which is cutting jobs in its ... printing and imaging group, took a ... charge in the quarter for work-force reductions [of] $37 million more than it had forecast. The reason: About 1,900 employees in the imaging and printing group signed up for a voluntary separation plan.
"More employees accepted the severance in the second quarter than we expected," Wayman said.

I would have expected them to get out while the getting's good, myself.


The Rule of reduction is having its expected results promptly:

? HP's printing and imaging group's operating profit declined from $952 million in the year-earlier quarter to $814 million. Color laser printer shipments increased 96 percent, and multifunction printer shipments increased 61 percent, HP said. Printing supplies revenue, however, grew only 4 percent.

Shipments and supplies revenues are up, but operating profit is down $138 million.

But then, management appears to be wasting its skills on brilliant metaphors:
Hurd said improving HP's operations is an urgent matter. "We're in a sprint to get the company in shape to run a marathon," Hurd said.

They should resume their dedication to getting rid of the people who increase profits in printing and imaging faster and faster and faster.

Posted by: Anton Philidor   Posted on: 05/18/05 You are currently: a Guest | Members login | Terms of Use

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