HEWLETT-PACKARD shares have kept going skyward for the year since Mark Hurd took the helm as CEO. The streak is now cooling, according to recent reports in the Wall Street Journal. An important challenge faces H-P--sales have to expand.
I have seen the data centre relocation plans that give H-P some of its cost savings and I think they could compromise sales growth. They look like relocation schemes near executives' homes instead of consolidation for company savings. More importantly, some of the consolidations will pit competing enterprise computing functions in head-to-head queues. The H-P data centres will try to satisfy runs by finance while simultaneously churning through sales staff orders. If H-P fails to expand its sales from month to month, I would look at the order fulfillment process. Some might be subordinated in queues they never had to join before the era of data centre consolidation.
Christopher Lawton -- "H-P's Pricey Stock Has Skeptics Playing the Odds on Growth Story of Chief Hurd" in The Wall Street Journal
"Money&Investing", March 28, 2006.