HP's Whitman: Turnaround on track, acquisitions in the future

In a wide-ranging interview with CNBC's "Squawk on the Street" Hewlett-Packard CEO Meg Whitman said that the company is on track for its five-year turnaround plan and outlined how acquisitions are part of her long-term strategy.

"We're two years into a five-year turnaround... overall, I'd say we're on track. We have a lot of heavy lifting ahead, but I like where we are," she said.

When asked whether the turnaround would take longer than expected, Whitman said that she doesn't think the company will "extend the window" for recovery.

When asked whether HP would consider a break-up to create value, Whitman said: "I believe HP has a set of assets that is unique in the big cap technology sector today." She outlined HP's reach, scale, and ability to bring products to market, and said she feels "really strongly" that the company is better intact.

On acquisitions, Whitman said the company is in a position to "rethink our capital allocation strategy" and that "acquisitions will become be part of our future… we have our eye on a number of areas."

Whitman added that the company will be "very judicious, very deliberate, make sure they are very strategic, and that we don't pay too much for these acquisitions." She said that she didn't want to repeat HP's history of making deals that "didn't work out too well."

Whitman said that there are several acquisitions the company may be interested in, adding that some are in the $100 million to $300 million range, and "perhaps some up to $1.5 billion."

"I don't want to do it just to buy growth," she said. "I want to do it to further the strategic position in the marketplace for HP."

Meg Whitman, President and Chief Executive Officer of Hewlett-Packard
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Whitman added that company is facing headwinds in the near-term, including disappointing performance in the company's the personal computer business.

"The PC business is still headed down and the market is still contracting," she said. "What we have to do is align all of our resources, R&D, sales, against those growth areas, so we can migrate away from those declining businesses to the growth businesses."

Whitman said the growth areas range from cloud computing, security, and big data to the company's Moonshot server system, which she said "has the opportunity to revolutionize servers."

When asked about fellow PC-maker Dell's strategy of aggressive pricing to gain market share, Whitman said that this was "certainly a factor" in HP's quarter. "They are very aggressive in the marketplace and we have to respond with that, we have to cope with that," she said, although Whitman added that this aggressiveness is likely to blame for the company's falling earnings.

When asked about layoffs, Whitman said that the company is approximately two-thirds through its planned restructuring and, as a result, "there is more labor that will leave Hewlett-Packard." In addition, she said the company can create greater efficiency in supply chain, logistics, and corporate enterprise business.

Hewlett-Packard announced some management changes Wednesday after posting an 8-percent drop in revenue as PC sales continue to slide. However, the company raised its outlook.

In a statement, Whitman said: "I remain confident that we are making progress in our turnaround. We are already seeing significant improvement in our operations (and) we are successfully rebuilding our balance sheet."

(Read more: Hewlett-Packard shakes up management, raises outlook)

Net income rose to $1.4 billion, or 71 cents a share, in the third quarter, compared with a loss of $8.9 billion, or $4.49 a share, in the year-earlier period.

Excluding items, earnings dropped to 86 cents per share from $1.00 a share a year ago.

Revenue eased 8 percent to $27.23 billion from $29.67 billion.

Analysts had expected the company to report earnings excluding items of 86 cents a share on $27.29 billion in revenue, according to a consensus estimate from Thomson Reuters.

— By CNBC's Paul Toscano. Follow him on Twitter @ToscanoPaul and get the latest stories from "Squawk on the Street." Reuters contributed to this report.