Wow! Check it out. We finally have a great 'insider' story, thanks to an intrepid reporter, James Bandler of Fortune, in the May 21, 2012 (yes, Virginia, the magazine stand date bears no resemblance to when the story emerges) Fortune, entitled "How HP lost its way".
Bandler interviewed seventy key folk in lots of arenas, and got some incredible material into the story. Leo is 'the fall guy', but he gets exonerated more than many might expect. Ray Lane comes off poorly in this account, while Cathie Lesjak (who usually stays behind the curtain) exhibits more character and traditional HP ethics than anyone else described.
The Lane and Hurd descriptions are not too different than the Valley already knew, but the Board infighting makes the drama around Carly / Hewlett or Patti Dunn / Tom Perkins seem almost tame.
One of the more insightful 'signals' that Bandler aptly reports is the 'razorwire compound' for the executive parking lot, which stunned Meg Whitman the day she first drove to it (and had it torn down to her credit). Bandler didn't mention that Hurd probably felt he needed the security since at NCR, he had repeatedly had his tires slashed by seething employees. Bandler did report the missing 85,000 chairs (that is right -- EIGHTY-FIVE THOUSAND chairs) that Hurd failed to buy for the new EDS team, and he also drew a wonderful portrait of the spiders from broken ceiling tile, and the mice scampering about inside HP buildings. A cartoon of the 'lights out at 6pm' order at HP Fort Collins graced the article.
The article, at least the piece that I've seen so far, fails to describe much of the technology insights or the awful infighting around the disastrous TouchPad launch, or the idiotic exorbitant purchase of Autonomy, but it does give a clear picture of the disarray at the Board and executive level during these episodes.
When finished, the article certainly does a damning indictment of HP's current situation, ironic since it appears the same day that Jeremy Owens at the San Jose Mercury-News noted that HP regained its spot in the Fortune 10 (on revenue) while Apple was only 17th. This is one of those transitory things, though, since the past two quarters show Apple nearly one-third larger than HP, and its momentum is up while HP's is ... ummn, "down".
Tuesday, May 8, 2012
Saturday, May 5, 2012
HP memories vs reality today
Marc Mislanghe has been busy compiling memoirs of oldtimer HP types at http://www.hpmemory.org/ New entries include Hank Taylor, Jim Hall, Art Fong, John Minck, and myself -- a small panoply of perspectives from yesteryear. You might say, "WHO CARES?"
The answer could very well be -- "well, it seems like a thousand people a day care" to judge from the Google Analytics. Not bad for an obscure website from a southern Frenchman near Birrritz, France who has been collecting HP instruments and computers for a decade "just 'cuz he loves 'em"
Each of these memoirs offers a glimpse inside a company that valued initiative and innovation at every job, every level of the company. They speak volumes to the idea that "bottoms-up" innovation works, and mostly works better than leadership at the top because, as Packard insisted, "those closest to the problem are the best ones to see a solution to it."
I don't have a favorite in the set, but I will especially mention Taylor's memoir, just because it focuses on innovation in Corporate Infrastructure, rather than products or field sales or marketing -- and such contributions are both harder to see and more systemic -- hence very seldom do they get mentioned. Ray Price and I found so much of this that we devoted a chapter -- "Secret Sauce" -- to it in our book HP Phenomenon. Hank does a first-rate job of describing this in multiple efforts at HP.
The answer could very well be -- "well, it seems like a thousand people a day care" to judge from the Google Analytics. Not bad for an obscure website from a southern Frenchman near Birrritz, France who has been collecting HP instruments and computers for a decade "just 'cuz he loves 'em"
Each of these memoirs offers a glimpse inside a company that valued initiative and innovation at every job, every level of the company. They speak volumes to the idea that "bottoms-up" innovation works, and mostly works better than leadership at the top because, as Packard insisted, "those closest to the problem are the best ones to see a solution to it."
I don't have a favorite in the set, but I will especially mention Taylor's memoir, just because it focuses on innovation in Corporate Infrastructure, rather than products or field sales or marketing -- and such contributions are both harder to see and more systemic -- hence very seldom do they get mentioned. Ray Price and I found so much of this that we devoted a chapter -- "Secret Sauce" -- to it in our book HP Phenomenon. Hank does a first-rate job of describing this in multiple efforts at HP.
Monday, March 5, 2012
a long time away from this blog
Holy mackerel... six months of no entries? Kind of a Rip Van Winkle time?
Actually, a fascinating time. Leo A got the boot, and in the enthusiasm and excitement I managed to get more air time than I needed, explaining my hoary views about Meg Whitman's possible candidacy (a day before she was selected.... sigh). Channel 7, KGO-TV, plus a few national squibs, somewhat indelible and affronting.
So, naturally when I gave a keynote talk to the annual HP Sales Force in Las Vegas in November, and she gave the talk after mine, we had a chance to meet, and I had a chance to apologize for intemperate remarks. Delicate moment, as they say....
To Meg's credit, she was gracious and disarming, offering that she'd heard lots worse from many others (doubtless on the political stump). I ate a little crow in front of her, and offered her a book, which she accepted and later sent me a thoughtful note.
The facts are, that I liked what she said, and more importantly, how she said it. And the word out of HP today is that she is building some trust again. That is different than shareholder value, which ostensibly is why we've changed so much (can you believe seven CEO's in five years, or is it just five in seven years?).
Leo A also corresponded mid-winter, and we met. Lots to discuss, but not lots to write, at least not now. The biggest take-away, besides the fiasco re the TouchPad and the PC 'decision' was his shock at the decrepit state of HP plant and facility when he arrived. He said Hurd had unscrewed the last working lightbulb to save costs.
Today, another signal... A longtime HP friend forwarded a paper, The Building of Employee Distrust: a Case Study of HP from 1995-2010, done by Kimberly Elsbach at UC Davis Biz School, a colleague from Imperial College in the UK, and Amy Stroud of HP. The story is that Meg saw the paper, and is circulating it. Right there is a shift of monumental proportions!
The paper will be given at the Organizational Dynamics conference in mid-summer. See http://gsm.ucdavis.edu/innovator-article/measuring-morale-hewlett-packard
Actually, a fascinating time. Leo A got the boot, and in the enthusiasm and excitement I managed to get more air time than I needed, explaining my hoary views about Meg Whitman's possible candidacy (a day before she was selected.... sigh). Channel 7, KGO-TV, plus a few national squibs, somewhat indelible and affronting.
So, naturally when I gave a keynote talk to the annual HP Sales Force in Las Vegas in November, and she gave the talk after mine, we had a chance to meet, and I had a chance to apologize for intemperate remarks. Delicate moment, as they say....
To Meg's credit, she was gracious and disarming, offering that she'd heard lots worse from many others (doubtless on the political stump). I ate a little crow in front of her, and offered her a book, which she accepted and later sent me a thoughtful note.
The facts are, that I liked what she said, and more importantly, how she said it. And the word out of HP today is that she is building some trust again. That is different than shareholder value, which ostensibly is why we've changed so much (can you believe seven CEO's in five years, or is it just five in seven years?).
Leo A also corresponded mid-winter, and we met. Lots to discuss, but not lots to write, at least not now. The biggest take-away, besides the fiasco re the TouchPad and the PC 'decision' was his shock at the decrepit state of HP plant and facility when he arrived. He said Hurd had unscrewed the last working lightbulb to save costs.
Today, another signal... A longtime HP friend forwarded a paper, The Building of Employee Distrust: a Case Study of HP from 1995-2010, done by Kimberly Elsbach at UC Davis Biz School, a colleague from Imperial College in the UK, and Amy Stroud of HP. The story is that Meg saw the paper, and is circulating it. Right there is a shift of monumental proportions!
The paper will be given at the Organizational Dynamics conference in mid-summer. See http://gsm.ucdavis.edu/innovator-article/measuring-morale-hewlett-packard
Wednesday, September 28, 2011
tumultuous
Well, THAT was a fine flurry of events. Along with many others, I weighed in on an opinion piece, when asked (in advance) "what do you think?" The problem is that soundbites are what the TV guys and the journalists are after, not the 'full story'.
Why did Leo get bounced? Well, lots of back story here. When did it start? Some might say the day he was named, given that two-thirds of the Board deigned to meet him in advance to interview him. That story was among the more incredulous to me; two-thirds of the Board at the largest high-tech company on the globe didn't "have time or energy" to interview the one standing candidate after they'd gotten rid of the thug on trumped up charges? Huh? These folk were getting $325,000 for six meetings a year; couldn't they 'throw in' one extra hour and at least meet Leo?
What did Leo do that was so bad? Well, killed the stock price by 50%, say all the WallStreeters and p'o'd shareholders. Not exactly, if you go correlate dates and stock price. Hurd in April got HP stock to $54, it fell 15% to $45 when 3rd quarter results were 'pre-announced' and another 15% to $38 when his departure happened, along with all of the foodfight for the next five weeks or so. Did he have hanky-panky, if so why should it matter, how consensual was it, did he really do more than we've all learned so far (answer -- of course), and so on...
Leo's 'regime' if we may call it that, starts at the $38 level, and ended at $24 or so, down another 37%. So the Board, if you will, abetted a total fall of 55%, but Leo did not do all of that by himself.
No one can defend the atrocious PR moves of the 3rd quarter announcements -- at least no one that I've met. Theories about sabotaged leaks abound, and after the shameful way that the Board handled Leo's dismissal, it is easier to believe them.
More fundamentally, Leo was a victim, in my view, of the vast difference between today's American press and the European business press on the one hand, and the gulf between the American business press now vs. when the Cookie Guy took over IBM nearly twenty years ago. Each faced a situation where the structural changes of the industry and the alignment of investments were at odds. At IBM, the wheels had already come off the wagon; at HP, they were about to do so.
It had to take courage to go to the street, ala David Packard's symbolic statements of the past, to say "we're going to take the heat, and change the strategy, and fix this over some time". Packard, though, owned the place; Leo did not. And this Board has no patience or ability to take the heat, or even, it might seem, understanding of the issues out there. How else could they sign off on dumping PCs?
When IBM dumped PCs on Lenovo, they were fourth in a field of three, losing money, share, and image. HP is the biggest kahuna on the planet, making almost the highest margins (next to Apple), with share = Dell plus Apple put together, in the biggest single product area by dollars on the globe. Bigger even than the Dreamliner.
But the key is the Enterprise play. Which is what the TouchPad was designed to do, NOT to be an Apple i-Pad killer. So who made the dumb decision to go to Best Buy. Does Best Buy sell the PCs and servers for infrastructure at the Fortune 1000? NO...
Someone has been seriously duped on this 'multi-pronged' and flawed strategy. And that isn't addressed or fixed with this CEO change.
So, time will tell. But it is not sanguine. I can only hope that the 'new team' gets it right, somehow, sometime soon. But when (and if) they do, it will look a lot more like Leo's strategy than Hurd's, and a lot more like Carly's than Platt's. And there will be room for a book called "What happened to Camelot?"
Why did Leo get bounced? Well, lots of back story here. When did it start? Some might say the day he was named, given that two-thirds of the Board deigned to meet him in advance to interview him. That story was among the more incredulous to me; two-thirds of the Board at the largest high-tech company on the globe didn't "have time or energy" to interview the one standing candidate after they'd gotten rid of the thug on trumped up charges? Huh? These folk were getting $325,000 for six meetings a year; couldn't they 'throw in' one extra hour and at least meet Leo?
What did Leo do that was so bad? Well, killed the stock price by 50%, say all the WallStreeters and p'o'd shareholders. Not exactly, if you go correlate dates and stock price. Hurd in April got HP stock to $54, it fell 15% to $45 when 3rd quarter results were 'pre-announced' and another 15% to $38 when his departure happened, along with all of the foodfight for the next five weeks or so. Did he have hanky-panky, if so why should it matter, how consensual was it, did he really do more than we've all learned so far (answer -- of course), and so on...
Leo's 'regime' if we may call it that, starts at the $38 level, and ended at $24 or so, down another 37%. So the Board, if you will, abetted a total fall of 55%, but Leo did not do all of that by himself.
No one can defend the atrocious PR moves of the 3rd quarter announcements -- at least no one that I've met. Theories about sabotaged leaks abound, and after the shameful way that the Board handled Leo's dismissal, it is easier to believe them.
More fundamentally, Leo was a victim, in my view, of the vast difference between today's American press and the European business press on the one hand, and the gulf between the American business press now vs. when the Cookie Guy took over IBM nearly twenty years ago. Each faced a situation where the structural changes of the industry and the alignment of investments were at odds. At IBM, the wheels had already come off the wagon; at HP, they were about to do so.
It had to take courage to go to the street, ala David Packard's symbolic statements of the past, to say "we're going to take the heat, and change the strategy, and fix this over some time". Packard, though, owned the place; Leo did not. And this Board has no patience or ability to take the heat, or even, it might seem, understanding of the issues out there. How else could they sign off on dumping PCs?
When IBM dumped PCs on Lenovo, they were fourth in a field of three, losing money, share, and image. HP is the biggest kahuna on the planet, making almost the highest margins (next to Apple), with share = Dell plus Apple put together, in the biggest single product area by dollars on the globe. Bigger even than the Dreamliner.
But the key is the Enterprise play. Which is what the TouchPad was designed to do, NOT to be an Apple i-Pad killer. So who made the dumb decision to go to Best Buy. Does Best Buy sell the PCs and servers for infrastructure at the Fortune 1000? NO...
Someone has been seriously duped on this 'multi-pronged' and flawed strategy. And that isn't addressed or fixed with this CEO change.
So, time will tell. But it is not sanguine. I can only hope that the 'new team' gets it right, somehow, sometime soon. But when (and if) they do, it will look a lot more like Leo's strategy than Hurd's, and a lot more like Carly's than Platt's. And there will be room for a book called "What happened to Camelot?"
Friday, September 16, 2011
HP bashing continues
One of my longtime friends, an HP 'oldtimer', wrote me last week: "Seriously, isn’t it true that there’s a VERY high level of unhappiness among HP supervisors (at least) since Leo was anointed to “save” the company, by getting rid of all that pesky hardware that none of the Board members used or understood? Grrrrrr"
And I surprised myself when I penned him the following:
No, it is not true across the board. The PC group is pissed, true. And frankly, they had it coming. Apple is 15x better these days. They (HP PCG) have gotten so arrogant and haughty, I found it nauseating. Even some of my best friends... sigh
The Services group is thrilled, frankly, even though Ann Livermore was 'one of the true blue HPers", she was stuck and they'd been screwed bad by Hurd. They love (or at least much prefer) Leo and Ray, partially because they understand relationship selling, and because they restored the salary cuts.
Peripherals (i.e. Printing since HP punted Discs and Terminals a long time ago) hasn't liked anything out of Palo Alto since Hackborn set it up thirty years ago. This spans five CEO's: Young, Platt, Carly, Hurd, and now Leo. Nothing has changed, except that they are no longer growing, and their spot in the sun is about over.
The Enterprise game -- which ALL BY ITSELF just surpassed IBM HW & SW for the first time (this is IBM HARDWARE AND SOFTWARE, which is all that IBM used to be) -- is beyond thrilled. This is the group that bought Autonomy (which I think was a stupid purchase because they bought the wrong company, not the wrong segment. Attensity's technology works; Autonomy's has been 'sold' to big corporate clients, but is really second-rate stuff by comparison. All the local 'smart companies' use Attensity now).
IBM is befuddled, despite the glowing East Coast press, the ads, and the stock price. You don't see this in the Wall St Journal, they still cannot believe that IBM is as weak as it is -- a problem they've had for thirty years. Ditto the Harvard Biz Review, the New York Times, and that asinine analyst reprinted in the San Jose Merc today, Toni Sacconaghi at Sanford Bernstein. The idiocy of these 'presumed analysts' escapes me how they get printed
This dumb bastard Sacconaghi issued an UNDERPERFORM, and then defends it, saying at the end the following: "I expect the stock to be at $37 within a year, so therefore it is a stock to avoid -- it takes a lot of patience". Is this guy for real? 61% gain in one year -- that's a LOT OF PATIENCE? These idiots are essentially day traders masquerading as investment advisors.
So, my friend, I'd say HOLD or even BUY. If they successfully spin out PC's (which they should, and will), that $40 Billion business alone will likely support a $10/15 per share price. If they do that, I would modify my longtime position to think that HP should also do the same with Printing. That would be another $12/18 per share -- how many $25 billion companies besides Intel, Microsoft and Google have greater than 50% market share and greater than 10% net profit? Those two pieces alone are worth more than the whole company is valued at today, mostly by panicked uninformed stockholders who've been pissed that the Board sacked wundurkind Hurd (the guy who systematically took R&D apart and virtually single-handedly killed HP morale and ethics) and now that Leo is having to rebuild the place, they're blaming HIM. Get real!
The company that would be left would be bigger than PCs and Printing. It'd be a $60billion juggernaut, growing twice as fast as IBM, aimed squarely at the "new cloud world" with more relevant underlying technology than IBM or Oracle or Cisco have today, and the only other contender is SAP, which they'll perhaps buy with the proceeds from the two sales. The new company would be worth $50/80 per share if given equivalent valuation to IBM's exalted price.
No one recalls that John Wooden had seventeen losing seasons at UCLA before his first team went to the quarterfinals. The next fourteen years built the legend.
No one recalls that Steve Jobs managed to cut Apple revenues in half in his first seven years back after they sacked Amelio and the other "suits". Nor that when he finally got growth back into Apple, it took three more years to get profitability turned around. It took four years to get the i-Pod "successful". And it wasn't until the i-Phone II that the sales were sustainable, let alone exciting. No question that Jobs deserves the accolades he gets. No question that it took him longer than John Wooden to 'get it right'
The clown in NY, self-reputed hedge fund genius David Einhorn, who in a May speech wanted to bag Steve Ballmer for 'bad management' at Microsoft since the shareprice hasn't risen in a decade, shows similar lack of understanding even though he can put dates on a stock price chart. He must have bought at the peak, and he clearly hasn't read the same equivalent numbers for Intel or Cisco or he'd be after all CEOs of high-tech companies that had bubble-priced stocks in 2000. Ballmer's run has been extraordinary, reprofiling the company so that it is NOT Windows-dependent, growing twice as fast as Intel, Dell, HP PCs, Cisco, and five times as fast as IBM, while merely tripling profits. Not a bad ten years for what is now a $75 billion dollar company at 20% net profits. Einhorn is a total idiot. But sadly, it is folk like him that shareholders have to listen to.
Most investors, I am convinced, don't have much if any sense of history. So, my friend, this can work to your advantage. HP is way stronger than the market is saying today. Enjoy...
And I surprised myself when I penned him the following:
No, it is not true across the board. The PC group is pissed, true. And frankly, they had it coming. Apple is 15x better these days. They (HP PCG) have gotten so arrogant and haughty, I found it nauseating. Even some of my best friends... sigh
The Services group is thrilled, frankly, even though Ann Livermore was 'one of the true blue HPers", she was stuck and they'd been screwed bad by Hurd. They love (or at least much prefer) Leo and Ray, partially because they understand relationship selling, and because they restored the salary cuts.
Peripherals (i.e. Printing since HP punted Discs and Terminals a long time ago) hasn't liked anything out of Palo Alto since Hackborn set it up thirty years ago. This spans five CEO's: Young, Platt, Carly, Hurd, and now Leo. Nothing has changed, except that they are no longer growing, and their spot in the sun is about over.
The Enterprise game -- which ALL BY ITSELF just surpassed IBM HW & SW for the first time (this is IBM HARDWARE AND SOFTWARE, which is all that IBM used to be) -- is beyond thrilled. This is the group that bought Autonomy (which I think was a stupid purchase because they bought the wrong company, not the wrong segment. Attensity's technology works; Autonomy's has been 'sold' to big corporate clients, but is really second-rate stuff by comparison. All the local 'smart companies' use Attensity now).
IBM is befuddled, despite the glowing East Coast press, the ads, and the stock price. You don't see this in the Wall St Journal, they still cannot believe that IBM is as weak as it is -- a problem they've had for thirty years. Ditto the Harvard Biz Review, the New York Times, and that asinine analyst reprinted in the San Jose Merc today, Toni Sacconaghi at Sanford Bernstein. The idiocy of these 'presumed analysts' escapes me how they get printed
This dumb bastard Sacconaghi issued an UNDERPERFORM, and then defends it, saying at the end the following: "I expect the stock to be at $37 within a year, so therefore it is a stock to avoid -- it takes a lot of patience". Is this guy for real? 61% gain in one year -- that's a LOT OF PATIENCE? These idiots are essentially day traders masquerading as investment advisors.
So, my friend, I'd say HOLD or even BUY. If they successfully spin out PC's (which they should, and will), that $40 Billion business alone will likely support a $10/15 per share price. If they do that, I would modify my longtime position to think that HP should also do the same with Printing. That would be another $12/18 per share -- how many $25 billion companies besides Intel, Microsoft and Google have greater than 50% market share and greater than 10% net profit? Those two pieces alone are worth more than the whole company is valued at today, mostly by panicked uninformed stockholders who've been pissed that the Board sacked wundurkind Hurd (the guy who systematically took R&D apart and virtually single-handedly killed HP morale and ethics) and now that Leo is having to rebuild the place, they're blaming HIM. Get real!
The company that would be left would be bigger than PCs and Printing. It'd be a $60billion juggernaut, growing twice as fast as IBM, aimed squarely at the "new cloud world" with more relevant underlying technology than IBM or Oracle or Cisco have today, and the only other contender is SAP, which they'll perhaps buy with the proceeds from the two sales. The new company would be worth $50/80 per share if given equivalent valuation to IBM's exalted price.
No one recalls that John Wooden had seventeen losing seasons at UCLA before his first team went to the quarterfinals. The next fourteen years built the legend.
No one recalls that Steve Jobs managed to cut Apple revenues in half in his first seven years back after they sacked Amelio and the other "suits". Nor that when he finally got growth back into Apple, it took three more years to get profitability turned around. It took four years to get the i-Pod "successful". And it wasn't until the i-Phone II that the sales were sustainable, let alone exciting. No question that Jobs deserves the accolades he gets. No question that it took him longer than John Wooden to 'get it right'
The clown in NY, self-reputed hedge fund genius David Einhorn, who in a May speech wanted to bag Steve Ballmer for 'bad management' at Microsoft since the shareprice hasn't risen in a decade, shows similar lack of understanding even though he can put dates on a stock price chart. He must have bought at the peak, and he clearly hasn't read the same equivalent numbers for Intel or Cisco or he'd be after all CEOs of high-tech companies that had bubble-priced stocks in 2000. Ballmer's run has been extraordinary, reprofiling the company so that it is NOT Windows-dependent, growing twice as fast as Intel, Dell, HP PCs, Cisco, and five times as fast as IBM, while merely tripling profits. Not a bad ten years for what is now a $75 billion dollar company at 20% net profits. Einhorn is a total idiot. But sadly, it is folk like him that shareholders have to listen to.
Most investors, I am convinced, don't have much if any sense of history. So, my friend, this can work to your advantage. HP is way stronger than the market is saying today. Enjoy...
Monday, September 12, 2011
Cisco paved the way for a long hot summer
The weather hasn't been all that warm in the Bay area this spring and summer, but the business press has been hot, Hot, HOT. Especially with the stories 'behind the stories'. Cisco downsizing, HP/Oracle suing and countersuing, Apple/Google suing and countersuing, Oracle and Google suing and countersuing, HP announcing with great fanfare and then withdrawing in even bigger fanfare, Jobs resigning and Carol Bartz detonating. Big stuff. Too much to digest?
Like, for instance, Cisco's 'blockbuster announcement' in mid-April about a possible 're-alignment', shifting from twenty-two "primary initiatives" back to "our main business". And then describing that this 'might' result in laying off 6,500 jobs. The business press treated it like a bombshell, but the number was disguised beautifully. First of all, it ignored the 5,000 folk with Fibercore and the Set-Top Box business who were 'sold', and it ignored the 500 folk with Flip-cam, jettisoned the day before they were scheduled to release their next great product. You'd think that with the top product in the world, you'd at least try to sell the division rather than just cancel it.
These moves get Cisco to 12,000 jobs 'lost' rather than 6,500. Then, some 3,000 were announced as 'taking the retirement or severance package' while another 2,800 declined such an offer. In spring 2011, estimates were that Cisco had 73,000 regulars (losing 15,000 by the count we've just listed, though the company later insisted that the 'retirees' were among the 6,500), and perhaps 25,000 'temporary workers' (plus or minus 15,000 or so).
Then, some unacknowledged number of 'temporary workers' were cut adrift, but the company would not comment on this one. The last time, in 2001, the numbers were staggering in the 'temporary ranks' -- then Cisco reportedly had 40,000 'regular' workers and 4,000 temporary. And 3,000/5,000 of the 'regulars' were let go, while 2,500 of the temps were dismissed. Estimates are that forty percent or more of the temps (vs. 60% ten years ago) were shown the door this time around. One key division reputedly had 75% of its 'staff' as 'temps' -- all of whom were dismissed.
All told, these frankly speculative numbers would put the real downsizing at 22,000 to 25,000 people, out of a total workforce of 98,000. That's BIG by any standard.
Why the secrecy re the 'temps'? Well, there are several reasons. First, this is a category that gets lots of Washington DC scrutiny after all the claims and issues around 'body shops' and cheap foreign labor and H1B visas. Books are now coming out describing some of the disgraceful practices, taking advantage of foreign nationals who have studied in America (50% of America's Masters degrees and 70% of PhDs granted in electrical engineering are to foreign nationals these days) and want to stay, or prospective graduate students who use jobs here as an entree.
Second, these jobs are by definition, and by law, restricted to "less than one year" in order to avoid the company having to provide health benefits and government wage taxes, costs that increase the labor cost to the company by up to one-third of the salary (but which tend to build longer-term loyalty as well as carry the fair share of the infrastructure cost of running our country). Anecdotal evidence, though, is that the average 'temporary' worker being let go at Cisco (just like most of the other Valley companies who use this same practice) has done the same job for an average of three and a half years -- the contracting 'job shop' just rejuggled the job title and description once a year. Patently illegal, but perfectly 'normal' in the Valley these days according to my sources.
And then, the rumor mill floated that Cisco's enormous push into 'the consumer space' with Linksys and the Scientific Atlanta acquisitions, as well as Webex and Tandberg for conferencing services, might be killed as well. The Tandberg folk we interviewed cheered this news mightily, but to date it is just rumor. When HP shot its own versions of teleconferencing a month later (June 1, 2011), the question became "does Cisco REALLY make money on these big Telepresence rooms? or do they give them to their biggest IT-shop clients to sweeten the router/fiber usage bundle?"
If all of this effort ebbs, it would be a shame, I think, for these are in fact game-changer technologies, just not particularly well executed as yet (little things like eye-contact sucks on the edge seats, because they save the cost of two extra cameras in a half-million dollar system).
All told, an interesting time at a company that has long been a bellwether in the Valley, both for a great place to work, and a progressive set of ideas for the market
Like, for instance, Cisco's 'blockbuster announcement' in mid-April about a possible 're-alignment', shifting from twenty-two "primary initiatives" back to "our main business". And then describing that this 'might' result in laying off 6,500 jobs. The business press treated it like a bombshell, but the number was disguised beautifully. First of all, it ignored the 5,000 folk with Fibercore and the Set-Top Box business who were 'sold', and it ignored the 500 folk with Flip-cam, jettisoned the day before they were scheduled to release their next great product. You'd think that with the top product in the world, you'd at least try to sell the division rather than just cancel it.
These moves get Cisco to 12,000 jobs 'lost' rather than 6,500. Then, some 3,000 were announced as 'taking the retirement or severance package' while another 2,800 declined such an offer. In spring 2011, estimates were that Cisco had 73,000 regulars (losing 15,000 by the count we've just listed, though the company later insisted that the 'retirees' were among the 6,500), and perhaps 25,000 'temporary workers' (plus or minus 15,000 or so).
Then, some unacknowledged number of 'temporary workers' were cut adrift, but the company would not comment on this one. The last time, in 2001, the numbers were staggering in the 'temporary ranks' -- then Cisco reportedly had 40,000 'regular' workers and 4,000 temporary. And 3,000/5,000 of the 'regulars' were let go, while 2,500 of the temps were dismissed. Estimates are that forty percent or more of the temps (vs. 60% ten years ago) were shown the door this time around. One key division reputedly had 75% of its 'staff' as 'temps' -- all of whom were dismissed.
All told, these frankly speculative numbers would put the real downsizing at 22,000 to 25,000 people, out of a total workforce of 98,000. That's BIG by any standard.
Why the secrecy re the 'temps'? Well, there are several reasons. First, this is a category that gets lots of Washington DC scrutiny after all the claims and issues around 'body shops' and cheap foreign labor and H1B visas. Books are now coming out describing some of the disgraceful practices, taking advantage of foreign nationals who have studied in America (50% of America's Masters degrees and 70% of PhDs granted in electrical engineering are to foreign nationals these days) and want to stay, or prospective graduate students who use jobs here as an entree.
Second, these jobs are by definition, and by law, restricted to "less than one year" in order to avoid the company having to provide health benefits and government wage taxes, costs that increase the labor cost to the company by up to one-third of the salary (but which tend to build longer-term loyalty as well as carry the fair share of the infrastructure cost of running our country). Anecdotal evidence, though, is that the average 'temporary' worker being let go at Cisco (just like most of the other Valley companies who use this same practice) has done the same job for an average of three and a half years -- the contracting 'job shop' just rejuggled the job title and description once a year. Patently illegal, but perfectly 'normal' in the Valley these days according to my sources.
And then, the rumor mill floated that Cisco's enormous push into 'the consumer space' with Linksys and the Scientific Atlanta acquisitions, as well as Webex and Tandberg for conferencing services, might be killed as well. The Tandberg folk we interviewed cheered this news mightily, but to date it is just rumor. When HP shot its own versions of teleconferencing a month later (June 1, 2011), the question became "does Cisco REALLY make money on these big Telepresence rooms? or do they give them to their biggest IT-shop clients to sweeten the router/fiber usage bundle?"
If all of this effort ebbs, it would be a shame, I think, for these are in fact game-changer technologies, just not particularly well executed as yet (little things like eye-contact sucks on the edge seats, because they save the cost of two extra cameras in a half-million dollar system).
All told, an interesting time at a company that has long been a bellwether in the Valley, both for a great place to work, and a progressive set of ideas for the market
Wednesday, August 24, 2011
Robert X. Cringely weighs in
Metroactive.com, the little San Jose rag laying around in fast-food joints and coffee shops, this week has Robt. X. Cringely's SV411.com column headed "Losing the HP Way." As usual, Cringely doesn't pull punches. He cites the Agilent spinoff in 1999 under Lew Platt as follows: "While this made sense at the time, and even today, there were unintended consequences of that spinoff -- the loss of HP's corporate soul.... Lew Platt blew it in my view."
Cringely mentions the 10% time for employees working on their own ideas as an early HP idea, rather than Google who now gets credit for 'inventing it'. Robt even says (correctly) that if you needed lab stock for your 'wild-ass idea' or anything else needed to do the job, say a magnetron or a barrel of acetone, it could be taken without question on Friday afternoons.
The cruelest irony he notes is that Apple will now be building its new spaceship intergalactic headquarters atop what used to be one of HP's most important labs. He's right. Might be right in his final sentence too -- "HP may have no route back to greatness."
Compared to today's idiotic articles quoting asinine pundits in the analyst world who think it fine to speculate that Oracle will buy a beaten-down HP to give Hurd satisfaction for burying Leo, Cringely does a straight-forward sobering analysis. HPites everywhere (the old kind) are saddened beyond words.
Cringely mentions the 10% time for employees working on their own ideas as an early HP idea, rather than Google who now gets credit for 'inventing it'. Robt even says (correctly) that if you needed lab stock for your 'wild-ass idea' or anything else needed to do the job, say a magnetron or a barrel of acetone, it could be taken without question on Friday afternoons.
The cruelest irony he notes is that Apple will now be building its new spaceship intergalactic headquarters atop what used to be one of HP's most important labs. He's right. Might be right in his final sentence too -- "HP may have no route back to greatness."
Compared to today's idiotic articles quoting asinine pundits in the analyst world who think it fine to speculate that Oracle will buy a beaten-down HP to give Hurd satisfaction for burying Leo, Cringely does a straight-forward sobering analysis. HPites everywhere (the old kind) are saddened beyond words.
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