HP's Hot on Storage

Storage networking was a major brushstroke in a rosy outlook painted by Hewlett-Packard Co. (NYSE: HPQ) for securities analysts in New York City today.

HP told assembled Wall Streeters that its current quarter is on track for revenues of $19.1 billion to $19.5 billion, reflecting about 2 percent to 4 percent declines due to seasonality in the first quarter of 2004. But HP expects earnings per share to increase 21 percent year-over-year to $0.35 on a non-GAAP basis.

What's more, HP's talking big for the long term. "HP is suggesting that it can sustain earnings growth above 20% beyond FY04," writes analyst Laura Conigliaro of Goldman Sachs & Co. in a note on the meeting today. The figure indicates HP expects revenue growth to be higher than current analyst estimates for 2004, she notes.

Can HP put its money where its mouth is? The jury's out. One thing, though: Storage has a big role in HP's forecast. Storage services are mentioned specifically in a roundup of worldwide service deals HP publicized today (see HP Boasts Services Growth). And in a presentation this morning, Peter Blackmore, executive VP of HP's Enterprise Services Group (ESG), said that "innovation around SANs and modular smart arrays will propel us in 2004."

Blackmore also praised HP's expertise in storage, saying the management in that area is "extremely deep."Indeed, storage is viewed as a linchpin of HP's strategy. In a prepared statement accompanying last month's earnings report, CEO Carly Fiorina referred to the "a strong performance in the fastest growing segment of the storage market" as key to ESG's return to the black.

One thing that could give a boost to HP's grand plans is the potential consolidation of HP Services with ESG, a plan outlined in today's Wall Street Journal. But Blackmore, Fiorina, and other execs didn't comment on the rumors this morning, although the move is generally expected to be announced soon.

If it happens, the new division could increase already fierce competition among top SAN vendors, resulting in better deals for enterprise customers.

We'll keep you posted.

Mary Jander, Site Editor, Byte and Switch