Hurd Sees No Services Fall Out For HP Partners With EDS Deal

The Everything Channel asked HP chairman and CEO Mark Hurd if there would be a sales conflict with HP badge services people and HP enterprise VARs -- would they be competing against each other?

"No, we try very hard to design our program to ensure that is not the case we view our partners as a fantastic asset and work hard to have a supportive relationships," Hurd said.

When asked if there would be rules of engagement, Hurd said, "We give credit when VARs sells something to one of our accounts. That sales person gets a credit in identifying and registering the deal."

Hurd's remarks echoed comments he made last week following the announcement of the EDS tie-up.

In a conference call last week with HP CEO Mark Hurd and EDS CEO Ron Rittenmeyer, the Everything Channel asked what if there would be an impact on HP service authorized enterprise partners and how they would integrate with the new EDS services organization.

"It's good for HP, so I think it will be good for our channel partners," said Hurd. "Our commitment to channel partners is in the DNA of HP. I don't think there's going to be anything but goodness in the context of that. If you look at our outsourcing business today and what we do in Consulting and Integration, we try and make it very complimentary with our partners so I don't anything there's going to be anything but goodness."

In a conference call with analysts Tuesday, Hurd acknowledged that although the Palo Alto, Calif.-based company is a "great engineering and a great customer support company, we have a market coverage problem and we expect this deal to significantly improve our enterprise share."

Hurd said that even without additional revenue from EDS, he expects the buy will accelerate HP's reach in key enterprise accounts and create a new platform for growth. He also said that there are attractive cost synergies and scale efficiencies.

Hurd also stressed that the company's, "cost initiatives are ongoing and significant. Make no mistake, we will get the costs down and we will create value for shareholders."

For the second quarter, revenue climbed 11 percent to $28.3 billion, up from $25.5 billion in the year-ago period. Second-quarter net income was $2.1 billion versus $1.8 billion in the same time a year ago.

In the Personal Systems Group, revenue grew 16 percent year over year to $10.1 billion, with unit shipments up 21 percent on a year-over-year basis.

Notebook revenue for the quarter grew 31 percent over the prior-year period, while desktop revenue was flat. Commercial client revenue grew 17 percent year-over-year, while Consumer client revenue increased 16 percent

Revenue in the Imaging and Printing Group grew 6 percent year-over-year to $7.6 billion. On a year-over-year basis, supplies revenue grew 8 percent,

Commercial hardware revenue grew 6 percent and consumer hardware revenue declined 3 percent. Printer unit shipments increased 6 percent year-over-year, with Consumer printer hardware units up 4 percent and Commercial printer hardware units up 9 percent.

HP Services revenue climbed 12 percent year-over-year to $4.6 billion. Revenue in Technology Services grew 10 percent, with Outsourcing Services and Consulting and Integration up 14 percent and 15 percent, respectively, compared with the prior-year period.

HP Software revenue grew 28 percent compared with the prior-year period to $727 million, driven by 36 percent growth in the Business Technology Optimization portfolio.

The company forecasted third-quarter revenue will range between $27.3 billion to $27.4 billion. For fiscal 2008, HP estimated that revenue will be between approximately $114.2 billion to $114.4 billion, up from previous guidance of $113.5 billion to $114.0 billion.

Craig Zarley contributed to this article