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from The Great Debate:

HP has to look beyond cost cuts soon

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EricAuchard.jpg-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

The stock price seems to be the only thing growing at Hewlett-Packard, the world's largest computer company. HP shares have risen 75 percent this year, despite few signs of a revival in technology spending.

The company, best known as a supplier of computer printers, has suffered a 19 percent drop in sales of hardware and ink supplies. In good times, this produced the bulk of HP's profits, but it's the financial engineering under Mark Hurd, the company's chairman and chief executive, that seems to be the main driver now.

So far, he has cut 16,000 of the planned 25,000 redundancies. It has taken roughly $3 billion in restructuring charges. This has masked underlying sales and profit weakness in its personal and corporate computer divisions.

Excluding the impact of the acquisition of computer services company EDS nearly a year ago, the company's remaining businesses declined nearly 20 percent during the fiscal third quarter ending in July.

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