HP to shift gears in visit to Houston - Company forum on technology will put spotlight back on products

In the midst of their boardroom nightmare, Hewlett-Packard's executives will be coming to Houston next week to meet with more than 6,000 of their most valued customers.

It's hardly the best time for a big public gathering. Hewlett-Packard is facing inquiries by federal and state officials on whether investigators hired to find the source of boardroom leaks violated the law by impersonating employees and journalists who cover HP.

But the company is sticking with the plan to hold this major event. HP Chief Executive Mark Hurd will be the keynote speaker Monday to help kick off the annual HP Technology Forum. The gathering offers sessions for customers and technology partners Monday through Thursday at the George R. Brown Convention Center.

Experts say that although the timing may not be opportune, the event could offer HP a chance to try to shift the focus away from the executive drama.

"If HP is not able to keep up with its business obligations in face of the crisis, its stock will fall. It will affect both employees and customers," said Doug Newsom, Texas Christian University journalism professor and author of textbooks on public relations.

"They need to keep the message and they also need to preserve their credibility."

Company's officials could not comment whether Hurd will address the boardroom scandal in his speech.

Earlier this week, HP's chairwoman, Patricia Dunn, said she will resign in January, after admitting she authorized an investigation of boardroom media leaks. The Justice Department and Congress are now investigating whether private security firms violated the law.

The U.S. House Energy and Commerce Committee on Friday asked Dunn and HP General Counsel Ann Baskins, who led the investigation, to testify at a hearing Sept. 28.

Negative publicity

Despite the wave of negative publicity, investors have not turned on the company's stock.

Analysts say the scandal had little effect on HP's market performance this week. HP's shares closed Friday at $36.18, within pennies of the close the previous Friday and not far from the 12-month high reached Tuesday of $36.92.

Kristi Browder, president of an independent HP user group called Encompass, said the scandal is a distraction for the company's executives, not its customers.

As one of the largest information technology companies, HP's main challenge is staying close to customers, Browder said.

"This forum will give them an opportunity to get a wide range of feedback for the company," Browder added.

Next week's forum will offer several training sessions focusing on key trends in the industry, including next-generation data centers, security and so-called virtualization technology that allows computers to run multiple operating systems.

Much-needed feedback

This offers the company much-needed feedback on what customers want and what they think of the company, and it allows HP to sell new products and services.

HP said it picked Houston because one of its biggest operations is based here.

HP spent $19 billion in 2001 to buy rival Compaq Computer, which helped the company in its strategy of becoming a major supplier of hardware and services, particularly to the corporate market. That spurred a pitched battle within the company over whether buying Compaq was a mistake, which was finally settled by a shareholder vote.

The HP Campus in northwest Houston now has 8,500 staffers -- making it one of the largest employers in town -- with operations engaged in research and development, customer support and sales and providing data storage services for big corporate customers.

"Bringing this event to Houston underscores our commitment to the city," said Nigel Ball, vice president for the HP's technology solutions group.

While here, HP needs to work on one of its big long-term goals -- speeding the company's growth.

Dramatic turnaround

Since he arrived, Hurd has been credited with a dramatic turnaround, with profit gains aiding the stock, which has gone up 31 percent in the past 12 months.

For the four fiscal quarters that ended July 31, HP said its revenue totaled $90 billion, compared with $85 billion for the same period a year ago.

Profits have benefited from a campaign to cut costs.

HP previously announced its plans to cut about 15,000 positions, or 10 percent of its global work force.

Analysts say shareholders pay little attention to the corporate politics but may question how much revenue growth HP will be able to add.

"The scandal has nothing to do with company's operations," said Charlie Wolf, an analyst with Needham & Co. "They have done a wonderful job with reducing expenses, but there is a limit to this process."