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All Eyes On HP


Even though the fireworks that landed Hewlett-Packard on the front page of most business sections last week are over, the company is sure to be watched closely by analysts wondering whether the computer maker can solve its problems.

The next few quarters will be key for HP to prove to Wall Street that the earnings shortfall of last quarter, which led to the unceremonious firing of three executives, did not reveal serious flaws stemming from the merger with Compaq more than two years ago.

At the time, HP chief executive Carly Fiorina won out against opponents who said investors would suffer in the deal. The time has now come for Fiorina to show her critics were wrong.

So far, the company has met many of its main financial targets since the merger through cost cutting, including the elimination of 17,000 jobs. Analysts will surely want to see the company make future targets by selling more products.

While HP is still No. 1 in the printer market and has held its own in personal computers, it's struggling against stiff competition in the corporate arena. HP remains behind IBM and other companies in information technology services, and has yet to prove it can win in the lucrative server market. Besides taking body blows from IBM on the high-end of the market, it's been losing rounds in the low-end against scrappy Dell.

Fiorina blamed last week's earnings disappointment on management problems and the switch to a new supply-chain system. The missed financial targets and the firings were the fireworks that brought intense scrutiny of HP. Now that the smoke is dissipating, a clearer picture of this high-tech icon is sure to follow.


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