If H-P Can Do It, So Can Your Company

Something shocking occurred this week. Not only did a certain technology company announce that it's not tanking because of the economy, but -- gasp! -- its sales had actually grown.

Hewlett-Packard ( HPQ) won't officially announce its fiscal fourth-quarter results until Monday, but it wanted to get the good news out early: a revenue increase of 19% over the same period last year. And a better-than-expected outlook.

At a time when tech companies from Intel ( INTC) to Apple ( AAPL) are suffering from the effects of the economic slowdown, that's an impressive revenue number. And the good news is that you don't have to be in the tech biz to emulate some of H-P's strategies for success.

First, a note of caution. Dig into the small print behind that 19% increase, and you'll find that sales gains weren't quite so dramatic. If you adjust for the effects of the weak dollar overseas, revenue rose 16%. Take away the effect that came from H-P's acquisition of EDS over the summer, and revenue grew 5% from last year, or 2% when adjusted for currency effects.

Still, any gain counts as good news this year. In fact, positive results from H-P were enough to lift the whole stock market.

How did the company do it? In a statement, CEO Mark Hurd credited "global reach, a diverse customer base, broad portfolio and numerous cost initiatives. Our ability to execute in a challenging marketplace differentiates H-P, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force."

Take away the standard company-boosting, executive-suite jargon, and Hurd hit on three components of H-P's winning formula, ones that any business can follow:

1. Diverse customers: There's something to be said for being all things to all people. H-P targets a variety of markets. Major corporations, of course, are a major source of revenue. But the company also customizes services for small-business owners and individual consumers. The H-P Web site, for example, has a whole section on craft projects for families (including some Spanish-language examples) and offers free online classes in everything from Photoshop to writing a Christmas newsletter.

H-P is getting a foothold in the education market, which in the past was largely Apple territory. This year, the company debuted a 2 ½-pound mini laptop computer for use in schools. It also teamed with the national PTA to sponsor "family movie nights" at thousands of schools around the country as a promotion for the PTA's new online video store, set up by H-P.

2. Broad portfolio: It's something cell-phone companies have understood for years: It's great to produce snazzy new gadgets, but the real profit comes from monthly plans that bring in predictable, guaranteed revenue.

More than half of H-P's profit comes from long-term, steady deals. Such service contracts can keep a company's bottom line from crashing when sales of products such as printers and computers dry up.

3. Cost initiatives: Hurd's terminology is basically a fancy way of saying the company has been aggressive about cutting the fat. In September, H-P announced it would be laying off 24,600 employees, largely as a result of its merger with EDS.

But Hewlett-Packard has been thinking creatively about other ways to cut costs, including green initiatives that show promising long-term savings. For example, the company's Dynamic Smart Cooling (DCS) system reduces energy costs by allowing real-time changes to air-conditioners, fans, vents and computing equipment. H-P data centers in Austin, Texas, are expected to save more than $100,000 a year after switching to the new system.

H-P will also be closing many of its buildings and offices for two weeks over the December holidays. The good news for workers: more time with family. The bad news: They'll have to use up their vacation time or borrow from next year's leave. Employees might not be thrilled about forced time off, but the savings can add up. Besides, how much work really gets done in your office on Dec. 26?

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.

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