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Big Companies ‘A Bit Wary’ on Technology Spending, HP Chief Says

Hewlett-Packard Co. Chief Executive Officer Leo Apotheker
Hewlett-Packard Co. Chief Executive Officer Leo Apotheker. Photographer: Keith Bedford/Bloomberg

July 9 (Bloomberg) -- Large corporations are exercising caution about large-scale information technology spending amid concerns about global economic growth and fiscal uncertainty, Hewlett-Packard Co. Chief Executive Officer Leo Apotheker said.

While technology upgrades are under way at many companies, “everybody’s a bit cautious in an environment like this,” Apotheker said today on the sidelines of the Rencontres Economiques conference in Aix-en-Provence, France. “People are still a bit wary.”

Providers of computer hardware and services are benefiting unevenly from a rebound in technology spending. HP’s rival Oracle Corp. reported a surprise decline in hardware sales last month. Still, IT spending by companies and governments in the U.S. is expected to grow 5.6 percent this year, about double the estimated rate of growth in gross domestic product, according to market researcher IDC.

Apotheker, who took over HP last November after leaving SAP AG, is looking to slice costs and spur sales after cutting $1 billion from the company’s annual revenue projection in May. Under its new CEO, HP is shifting toward cloud-based services and new devices like tablet computers to reduce reliance on traditional personal computers. In May, he warned employees to expect “another tough quarter” in the July period and urged managers to cut expenses.

HP is continuing discussions with other hardware manufacturers on licensing its WebOS mobile operating system for their devices, Apotheker said today, and isn’t concerned such agreements could cannibalize sales of its own TouchPad tablet. That device went on sale July 1.

Samsung Electronics Co., the maker of devices based on Google Inc.’s Android software including the Galaxy Tab and Nexus smartphone, is in talks to use WebOS in future devices, three people with knowledge of the discussions said earlier this year. Apotheker declined to identify the company’s potential partners in licensing the software.

To contact the reporter on this story: Matthew Campbell in Aix-en-Provence, France at mcampbell39@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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