HP shares jump as Whitman assures turnaround is on track

HP boss claims she is comfortable with the progress of transformation efforts after being "dangerously behind" this time a year ago

HP shares rose as much as nine per cent last night after its chief executive Meg Whitman assured an analyst conference the firm's turnaround efforts are on track.

She told the group that this time last year, the business was "falling dangerously behind" on its five-year transformation plan, but that it had come back fighting.

"A year later, I can confidently say that while there is still a lot more work to be done, we're making real progress," Whitman said.

"A year ago, our cost structure was out of line with the revenue trajectory of our business, our balance sheet had a significant amount of debt on it, our sales teams and partners lacked modern tools, IT infrastructure and support needed to sell efficiently and effectively.

"Our company overall – as well as business units – lacked clear, crisp, integrated strategies and as a result, many of our customers and partners were not sure how best to engage with the company.

"Our innovation pipeline was there but not being commercialised nearly fast enough. In short, last year I felt HP was falling dangerously behind."

When Whitman joined HP, she set out her five-year plan to change the company. She said fiscal 2012 would be for diagnosing issues, the next year would focus on fixing and rebuilding those problems, while fiscal 2014 would be mainly concerned with recovery and expansion. The final two years of the plan will see HP tasked with accelerating the business and becoming an industry-leading firm respectively.

Progress

Despite last year's shaky start to the plan, Whitman said this year's numbers speak for themselves – boasting that the firm has generated about $7bn (£4.9bn) in free cash flow during the first three quarters of this year – well ahead of its guidance.

She added that in the last 12 months, HP has lowered its operating company net debt – excluding that associated with its financing business – by almost $8bn.

"From rebuilding the balance sheet to reaffirming our commitment to innovation, our multi-year journey continues," she said. "Now, I would love us to be at the end of this journey; I'm comfortable with the progress we are making."