The market is assuming that Hewlett-Packard will grow 6% next year, from its current annual revenue of $92 million. This is the company’s forecast, and CEO Mark Hurd has earned enough respect with Wall St. so that the forecast is widely accepted
A good portion of HP’s growth targets are built around marketing cost-efficient data centers and consumer electronics devices.
HP’s expertise in creating data centers that are efficient and save large companies money is likely to become a large business for the big tech firm. HP has the ability and sales force, and the favorable economics are compelling.
But, consumer electronics sales bring the company into an ultra-competitive, even cut-throat part of the economy. The short-term growth potential of HP televisions and iPaq handheld wireless devices is far from certain. Moving into the realm of Apple, Sony, and Microsoft has damaged a number of companies. Firms like Sandisk and Creative Technology can attest to that.
If HP’s 2007 number has a significant consumer electronics component to it, 6% growth may be too much.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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