HP's Mark Hurd

Mark Hurd, CEO of Hewlett-Packard joined Maria Bartiromo after the close today, with an exclusive look at its fiscal Q4 numbers. Here's the full transcript of the interview.

Bartiromo:You said that your operational execution and improving cost structure generated strong quarterly and year-end results. We've got the numbers here. Obviously strong. How much was this cost cutting and how much is this actually end market demand, Mark?

Hurd: We saw good sequential improvement in the market from a top line perspective. I think when you couple that on top of a more efficient cost structure, you get the kind of numbers that I just heard Jim talk about. And so I think we've got an improved, sustainable cost structure. And as we continue to see, and hope to see improved demand, we think it's going to bear good things for us.

Bartiromo:So you've got solid performance in terms of services. Tell us where the services growth comes from around the world. Last time we spoke, you were betting on Asia in a big way. We're coming to you today from Singapore. Is that the jewel of the story for HP?

Hurd:Well, you know, Asia was strong for us overall. We saw strong in China again. We had over 20% growth as a company in china. So that was improvement for us. And we saw solid improvement across the rest of Asia as well, perhaps with the exception of Japan. The U.S., Maria, though, was better again. I think the last time we talked, we talked about some sequential improvement in the U.S. We saw that again in Q4. It's really a combination of Asia and improvement in the U.S. That led to the top line performance that we just delivered.

Bartiromo:Nice to hear U.S. is improving. Business is already setting to set the budgets for 2010. What are you seeing from customers in terms of budgets going into 2010? Are they willing to take a risk? Are they willing to increase spending at this juncture?

Hurd:Yeah, I still think spending will be prudent in '10. But we believe it will be better than 2009. So I think that we look for improvement over '09. Still too early to call. As you said, budgets are just getting firmed up for calendar 2010. We think the company will return to growth in 2010 as a result of it. I would say this, Maria, we feel at a point that whatever the market gives us in terms of growth, we believe HP will outperform that from a market performance perspective. We feel very good about entering the year with a strong portfolio. You mentioned services. EDS now integrated. Probably a number -- our story within the numbers are signing and services, were as strong as we've seen in a long time. So while we spent the early part of the year integrating EDS, and really trying to get the cost structure lined up right, the signings we saw in Q4 were very exciting. That doesn't actually show up in the actual numbers that we're reporting for Q4, but certainly is a good statement about the future of the services business. So we feel good about the portfolio. You mentioned we made an acquisition just a couple of weeks ago, we feel good about the portfolio, good about our cost structure. We feel prepared to have a solid '10.

Bartiromo:Why was the 3Com acquisition important, and also, what can you tell us about Europe? For a long time it's really been Europe that has been the slow mover when you look at companies across the board whether it's technology or industrial, whatever, Europe seems to be flat. Any change there? Talk to us a little bit about 3Com.

Hurd:Let me take the Europe one first. I think your point's right, Maria. I'd probably be a little bit more exuberant if I saw the same trends in Europe that I saw in the rest of the world. There are stories within the story within Europe with some countries that we have seen some improvement in. The again, we gained some share in Europe, and the overall market looks to us to be okay. It looks stable to us. But I think we'll feel really good about 2010, when we start to see some of the same trends we've seen in the rest of the world around Europe. We haven't seen them long enough yet to feel great about it. With 3Com, I think for us, for the last several years, we've had a view of converged infrastructure. What that means to us is, servers, storage and networking always integrating with each other to perform an overall capability for the market and for customers. The network becomes a key piece of that. So for us, it's all about, we've been gaining share in networking with our ProCurve business, and customers have been wanting us to have a broader portfolio. So for us it was more of a strategic play around the infrastructure, sort of rounding out our networking portfolio, on top of what we'd already done with ProCurve. And at the end of the day we felt 3Com had the best technology on the planet in the networking market. And as a result, it became very attractive for us to bring into our portfolio. That's why we did it.



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