# Mark Hurd, CEO and President of HP, emphasized that the cost-cutting measures are not finished and that there is much more that the company can do, and plans to do, in order to become more efficient. Management reiterated their 07 guidance, which is revenue of approximately $97 billion.
# In addition, the company provided guidance for its 08. My expectations were that the company would provide revenue guidance of approximately 5-6% and operating margin guidance of between 9.0% and 9.5%. This is exactly what the company reported for its 08 guidance.
# Management said that it has more work to do in the cost-cutting arena and that it is not over yet. Mark Hurd highlighted total TAM of $1 trillion and reiterated the focus on continuous cost evaluation and reduction especially in the support functions, such as data centers and real estate.
# HPQ's Imaging and Printing Systems contributed 29% of total revenues in 06, it continues to yield the bulk of operating profits, 49% of total operating profits in 06, which are largely dependent on the growth of product-related supplies.
# IPG raised its operating margin guidance from 13-15% to 14-15%, mainly due to expected higher supplies mix [given share gain] and stable pricing environment. HP indicated that it is not in favor of initiating a price aggression, which should benefit the printing industry in general, and Lexmark (NYSE:LXK) in particular.
# Management has seen growing demand for cool servers. Management indicated that customers are now increasingly focusing on power and cooling costs. HP highlighted that power and cooling costs are about 40% of TCO of data center. Data center power density is up to 10x in past 10 years and energy costs keep rising.
# A derivative play of this is RACK, as the server news is music to RACK's ears.
HPQ 1-yr chart