What HP learned from Procter & Gamble

Of all its services customers, HP may have learned the most from Procter & Gamble, the consumer products giant whose brands include Pampers, Charmin and Mr. Clean. Image: Procter & Gamble

Before you buy a high-end hotel, it’s probably smart to make sure you can handle demanding customers.

This common-sense idea would seem to apply both to hospitality and to high-tech. And it explains why Hewlett-Packard (HPQ) executives sound so sure they can successfully expand beyond their own modest services operation to run a sprawling outsourcing company. Investors will get their first peek at how well HP is doing on Monday after the markets close, when it issues the first earnings report that includes its purchase of IT services firm EDS. (HP last week preannounced fourth-quarter sales and profits that beat analysts’ estimates, but the results weren’t broken down by business units.)

Though there will be plenty of questions late Monday about the health of HP’s core PC and printer businesses, analysts are sure to devote special attention to the newly-merged services and outsourcing operation. It represents both opportunity and danger: If HP can quickly whip EDS into shape, it will add more than $22 billion in revenue to the balance sheet. If not, eager competitors will steal EDS customers, and bloated costs will sink HP’s profits.