Whitman: HP has chance to 'clean sheet' two companies

HP's new business style

The companies that emerge from Hewlett-Packard's planned split will be leaner and more cost-effective as HP goes through every line item and examines every cost, CEO Meg Whitman told CNBC on Wednesday, a day after reporting quarterly revenue had fallen in almost every business segment over the year.

Whitman said the company has the opportunity to ask a question that few businesses get the opportunity to answer: "If I knew what I know now, how would I set up these two companies?"

Hewlett-Packard is in the process of separating its enterprise services and traditional computing business.

"We get to 'clean sheet' two new technology operations for both companies," she said in an interview on "Squawk on the Street." "Our fundamental IT is based on a manufacturing system because we used to be a manufacturer."

"We don't have to do it that way anymore, and we can really just build the entire new style of IT for both these companies," she said. "Those are the kinds of things that are going to make us more efficient and effective for the next decade."

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Responding to concerns that the two companies will lose pricing power, Whitman said they will have supply chain agreements to make sure they have buying leverage with their biggest partners.

She added that other times it will be better to be smaller and more nimble so it can buy more commodities on the spot market and take advantage of deals that aren't tied up in enormous purchasing agreements.

In its earnings report Tuesday, Hewlett Packard said sales fell 2.5 percent in the fourth quarter to $28.41 billion, from $29.13 billion a year earlier. Analysts had expected $28.76 billion.

Profit declined 2.7 percent to $2.01 billion, or $1.06 cents a share, compared with $1.01 cents a share a year ago, in line with analysts' expectations.

"I've always said that turnarounds aren't linear,'' Whitman told analysts on a conference call. "We're right where we thought we'd be.''

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On CNBC, Whitman noted that the fourth quarter marked the first reporting period that the company saw operating margin expansion in every single business since early 2011. She said that was a sign its cost discipline is in place.

The enterprise group and enterprise services, areas that Whitman had previously flagged as growth drivers, showed revenue declines of 4 percent and 7 percent respectively.

The company's personal computer division, its largest and most mature, grew by 4 percent after a 12 percent jump in the prior quarter. Much of the growth in PCs was driven by a Microsoft's decision to quit supporting older software.

Hewlett-Packard expects the segment will be in slow decline over time, but it stands to gain market share, Whitman said.

Reuters contributed to this story.