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HP's growth issues

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The market is assuming that Hewlett-Packard Co. (NYSE:HPQ) will grow 6% next year, from its current annual revenue of $92 million. This is the company's forecast, and CEO Mark Hurd has earned enough respect with Wall Street so that the forecast is widely accepted

A good portion of HP's growth targets are built around marketing cost-efficient data centers and consumer electronics devices.

HP's expertise in creating data centers that are efficient and save large companies money is likely to become a large business for the big tech firm. HP has the ability and sales force, and the favorable economics are compelling.

But, consumer electronics sales bring the company into an ultra-competitive, even cut-throat part of the economy. The short-term growth potential of HP televisions and iPaq handheld wireless devices is far from certain. Moving into the realm of Apple Computer Inc. (NASDAQ:AAPL), Sony Corp. (NYSE:SNE), and Microsoft Corp. (NASDAQ:MSFT) has damaged a number of companies. Firms like SanDisk Corp. (NASDAQ:SNDK) and Creative Technology Ltd. (NASDAQ:CREAF) can attest to that.

If HP's 2007 number has a significant consumer electronics component to it, 6% growth may be too much.

Douglas A McIntyre is a partner at 24/7 Wall St.

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Last updated: November 12, 2009: 07:03 AM

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