HP Stays Hopeful on Storage

Storage was the major drag on Hewlett-Packard Co. (NYSE: HPQ) when it bottomed out last August and remained a laggard when it staged a bit of a recovery last quarter (see HP Storage Slammed and HP Reports Q1). Yet, HP executives say networked storage remains a major part of the companys overall strategy.

“One of the important factors in our overall mix is some of the recovery activity in our storage business,” Ann Livermore, executive VP of HP's Technology Solutions group, told analysts on the company’s earnings report call Wednesday night. “We are on a trajectory to build back revenue, and that’s important to us as we look to the second half in terms our storage strategy.”

Despite Livermore’s optimistic tone, HP’s earnings report from last quarter raised the question of whether the storage glass is half empty or half full. On the plus side:

On the other hand:

Naturally, Livermore, who heads HP’s servers and storage division, took the rosier view. “After a number of challenging quarters with significant year-over-year revenue declines, performance in storage is improving,” she says. “The investments we are making in storage sales specialists as well as in channel partners are increasing our sales effectiveness, but we recognize we have a lot more work to do. We are certainly not where we want to be yet in storage.”

Skeptics say chances of a quick turnaround look slim. HP lacks any compelling new products on the horizon and is in a period of uncertainty while searching for a CEO to replace Carly Fiorina (see HP Plots New Course).

“While management has been making new efforts to improve HP’s storage positioning, we believe it’s proving one of the toughest segments to grow/fix,” Fulcrum Global Partnersanalyst Robert Cihra wrote today in a research note. “Back when HP acquired Compaq’s StorageWorks, it became a behemoth in midrange storage, but we think the company has struggled versus new pressures from Dell and EMC.”

— Dave Raffo, Senior Editor, Byte and Switch