Monday, October 6, 2014

106DC3C8-EC62-426C-BE1F-C2C73E79E101.html

HP has the agility of 'a bag of cement': McNamee

Drew Sandholm | @drewsandholm 6 Hours Ago CNBC.

Hewlett-Packard's plans to split into two companies is too
little, too late, technology investor Roger McNamee said
Monday.

"They have all the agility of a bag of cement," McNamee,
co-founder of Elevation Partners, said on "Squawk Alley."
"It seems to me they've been at least two, maybe three years
behind every important trend."

Rival IBM, on the other hand, divested PCs and servers

years ago on the realization these businesses have little
growth potential, McNamee said.(he's omitting the fact that
IBM was 4th in a field of 3, losing money on PCs, when they
divested; HP has been 1 or 2 for a decade, making fair $$)

"In fairness, I think HP has been horribly managed for
20 years (so he indicts Lew Platt quite as much as Carly
Fiorina, etc) and, you know, so [CEO] Meg Whitman didn't
inherit a great situation, but I don't think there's any evidence
that she's gotten control of it, that she has any idea what they
ought to do next," he said. "I don't see any plan for either side
of these things that's going to make a difference to
shareholders... the long-term outlook for both sides of this
business is terrible."

On the tape, McNamee assails the plan because more execs
will milk more money from the treasury.
He should know, he got plenty from HP at a time that Palm's
old boss, Todd Bradley, took home $27M to run PCs for a year.
for HP--a year that Hurd and three others milked $110M in
salaries and perks from a company they stole blind.

The benefits and pitfalls of breakup at HP

Earlier, Hewlett-Packard surged after saying it would split its
hardware and services businesses from the personal-computer
and printer business, forming two publicly traded companies.

"We think this is the best tactic to continue this turnaround
journey and position HP into two great new companies that
are real scale and have a real chance to make a real
difference on a go-forward business," Whitman said on
"Squawk on the Street."

"We're really excited about this," she said. "I think it's going
to be better offerings for customers and partners, career
opportunities for employees and we believe it will create
real shareholder value."

I had the opportunity to hear Dion speak at a luncheon not long back. He was addressing a group, perhaps 100 or so, of HP senior execs, with a vision of where the PC business 'had been, is, and is going." I'd not met him before, and it was stimulating, to say the least.

At the end, I introduced myself, commenting that he had the "fire, the energy, and the perspective" that made me proud of HP over all these years--WELCOME ABOARD. Especially so, though I didn't say it, by comparison with his predecessor.

He spent considerable time on one anecdote, when he came from Australia to Japan for Acer, and they had a very big pending order with a major Japanese firm that was to be signed the next morning, but he had been invited to a celebratory dinner that night with the President.

He went to the dinner, enjoying it a lot, and as is customary, was invited to multiple Kam-pai drinks. After a while, he demurred, and the evening continued for awhile. Very early the next morning, a telephone call to his office postponed the signing ceremony. Which, ultimately, never happened.

Now the story truly begins. Dion called on the President virtually daily, to no avail. He said he called for more than three months (is this persistence, or what), and finally the guy took the call, and explained that he "couldn't trust" this supplier if he wouldn't drink with him. Lesson learned, but multiple lessons came out of this anecdote.

The group heard him.

The next quarter was the first one in nine that HP had improved revenues and margins in PCs, beating Lenovo.

Oh, did I mention that Dion came from Acer, to Lenovo, and now to HP.

He will be terrific, and will indeed become well known in our Valley, and in this company.

Sunday, October 5, 2014

Si Valley Biz Journal about WSJ story

Report: Hewlett-Packard plans to

break into 2 companies

Oct 5, 2014, 10:54am PDT
UPDATED: Oct 5, 2014, 6:27pm PDT (my comments in red)

The WSJ report cited unnamed sources who said the plan
could be announced as early as Monday. The split would be
tax-free distribution of stock to shareholders next year, one
of the Journal's sources said.

It would be the second big breakup of a Silicon Valley tech
powerhouse in a week, following eBay's plan to spin off
PayPal. It also follows Oracle's announcement thatLarry
Ellison was handing the CEO reins over to former HP CEO
Mark Hurd and Safra Catz.

Reports of HP's plans come a few weeks after HP's talks
reportedly broke down about a possible merger with EMC,
whose CEO Joe Tucci is near retirement and whose
leadership in the data-storage industry is being challenged
by a group of upstarts.

The move by HP has long been speculated upon and follows
the 2011 exploration of a spinoff of the PC business during
Leo Apotheker's stormy and short tenure as CEO.

Current HP CEO Meg Whitman reorganized the company to
combine the PC and printer units, which are among the
leaders in shrinking businesses. HP was No. 1 in PCs until
last year when it slipped behind China's Lenovo Group Ltd.

The Journal said that Whitman will be chairman of the PC
and printer business and CEO of the other, enterprise-
focused business. Lead independent director Patricia Russo
will be chairman of the enterprise company. Dion Weisler,
an executive in the PC and printer operation will be CEO
of that business, the Journal said.

HP brought in $55.9 billion in revenue from its printing and
personal systems group last year, about half of its total. But
sales dropped by about 7.1 percent in the unit, compared
to a 6.7 percent drop for the company as a whole.

Last year, HP lost its place as the largest PC maker by
shipments, slipping to No. 2 behind China’s Lenovo Group
Ltd, according to industry research firm IDC.

The company is Silicon Valley’s 17th-biggest tech employer,
with 2,600 full-time employees in the region as of May,
according to Business Journal research. That’s almost a
50 percent drop from the prior year, when HP employed
5,000 in the region. The drop mirrors the company’s
downsizing worldwide, with the company headcount at
317,500 in May, down 4 percent from 12 months before.
(Well, what kind of reporting is this? A 50% local
downsizing mirrors a 4% ww downsizing? Can the guy
do any math at all?)

HP famously emerged from a Palo Alto garage 75 years
ago, growing into a computing powerhouse whose stock
peaked during the tech bubble of the 1990s. (not exactly.
HP stock was uncommonly quiescent during the tech
bubble of the 1990s since it missed the bubble. Cisco
and Intel (and Sun Micro) caught the bubble; their stock
today is still less than half their 2000 prices; not much
different than HP). Its shares have tripled in value since
November of 2012, when it hit an 18-year low. The stock
is still only worth about half the all-time high it reached in
2000 (Cisco's is one-third, Intel's 45%, Sun non-existent).
HP's market cap is about $66 billion, based on
Friday's closing price of $35.20.

It has been at the center of several executive office storms
and strategic missteps over the past 10 years.

On the boardroom side are the notable firings of CEOs
Carly Fiorina, Mark Hurd and Apotheker and a scandal
involving spying on board members and reporters.
Among its strategic mistakes, HP bought Palm after
missing the shift to mobile computing. (Again, shoddy
reporting. HP had not (yet) missed the mobile computing
boom; they announced the TouchPad before Apple
announced the iPad but couldn't deliver. They bought
Palm before the iPhone (with the iPhone 3 was successful.
Palm's Pre was a far better phone than anything on the
market, but the iPhone 3 scooped the field with the App
Store, which of course made it "not a Phone, but a
platform). 't also overpaid wildly for British software
company Autonomy, which led to an $8.8 billion
writedown and resulting shareholder lawsuits (no
argument here. Autonomy was a dumb Dumb DUMB
move, indulged by Apotheker apparently who loved the
Europeaness of the deal. Attensity, locally, especially
after they bought Insight, was a far better technology,
far smarter customers, and far cheaper.
But no one asked me).

Whitman has tried to push HP into the areas where
technology is evolving, such as cloud computing,
without notable success yet. She has shored up its
stock through a series of job cuts and cost reductions.

After trying to revive HP and keep it whole through
those moves, she and the board have apparently
decided the time has come for a complete split
between the sides of the business that are declining
and the parts that have the best growth prospects
going forward (this is nervy, to pronounce one side a
loser right off the bat. Especially with HP taking back
the PC dynamic in the last 135 days from Lenovo, and
major printing announcements imminent. But it is the
conventional wisdom of the pundits, so we're stuck
with it for now).

Cromwell Schubarth is the Senior Technology Reporter

at the Silicon Valley Business Journal.

Thoughts about the 'split' news

If true (and the Wall Street Journal seldom prints a story, even on its electronic page on Sunday, that is as far wrong as the Chicago Tribute story that Governor Dewey beat Truman in November 1948), this should be very good news for a whole lot of folk.

First in terms of valuation for a PC/Printer spinout, it couldn't happen at a better time--PCs had a bit of an upsurge last quarter for HP, first in nine quarters; and the printer business is sustaining despite all the naysayers. Second, the Printer Group has a host of new products ready for launch, including the heavily-hyped 3D printers, but more importantly, some true industrial-grade machines, and their Instant Ink program is finally getting some legs.

Sidenote: since I wrote about my 'new' HP 8600 printer last December in this blog, it has logged something like 24 reams of paper, with relatively minor ink purchases. More impressively, HP bestowed upon me an HP Envy, or HP5530, with the Instant Ink service. The idea here is that your printer is connected to the network, and HP continuously monitors the ink levels, and mails you new ink before you need it--at something akin to 40% off list price. But it is the convenience factor that wins (now, if installation had been easy, I'd have written about it sooner--they still have a lot to learn).

Second, in terms of focus, this changes everything. The last workshop I ran for HP (August), we went through eleven tables (of fourteen) before anyone mentioned the peripherals as an important business side for HP. I stopped the meeting, asking about profits and revenues--wondering why this came up 'so late' in the session. After all, ink alone is 9% of revenues, but 42% of profits. Someone ought to be worried about its sustainability. Now someone will whose in a position to do something.

Third, it will help the corporate focus side. The dealer channel, and the consumer side, are tough customers, very often fickle beyond all reason, and able to vote yeah or nay quickly (ask HP about TouchPad and the Palm Pre), ask Motorola about the Razr phone, ask Nokia about phones period. Corporate buyers have a different lens, different priorities. HP has long known this business, very significantly different than the other. Again, no contention for who sells what, how to advertise.

Heard from several HPites in the first hour of this story breaking. They're excited, some of the same ones who were dismayed when a similar story surfaced two years ago, and of course, a similar story was Leo Apothekar's undoing.

So, the next 24 hours might be more interesting than the last 24.

This is BIG news

By
Updated Oct. 5, 2014 2:03 p.m. ET

Hewlett-Packard Co. plans to break in two, separating
its personal-computer and printer businesses from its
corporate hardware and services operations, accord-
ing to people familiar with the matter.
The company plans to announce the move as early as
Monday, the people said. It is expected to be effected
as a tax-free distribution of shares to the company’s
stockholders next year, one of the people said.

HP plans to separate its personal-computer and printer
businesses from its corporate hardware and services
operations, the latest attempt by the technology company
to improve its fortunes by breaking itself in two.

The company intends to announce the move on Monday,
people familiar with the plan said. It is expected to make
the split through a tax-free distribution of shares to stock-
holders next year, said one of the people.

If the division goes off as planned, it would give rise to two
publicly traded companies, each with more than $50 billion
in annual revenue.

A number of big companies, including eBay Inc. in tech,
have chosen to break up lately, in part because of a belief
that operations with different growth profiles are best
managed as separate entities. H-P, which has suffered
sharp sales declines, sees better long-term potential for
its corporate hardware and services business than for its
printer and PC unit, said one person familiar with the plan.

Ralph Whitworth, an H-P investor who until recently was its
chairman, said about the news in a text message Sunday:
“This would be a brilliant move at just the right moment in the
turnaround. It would liberate significant trapped value.” As of
June, the firm Mr. Whitworth co-founded, Relational Investors
LLC, owned a roughly 1.5% stake in the company.

The impending move, first reported Sunday by The Wall
Street Journal, set off a round of speculation in the industry
about whether the separation could lead to more deal making.

The Journal recently reported that for much of the past year,
H-P held talks to merge with data-storage equipment maker
EMC Corp. a deal that would have created an industry giant
with a market value of roughly $130 billion. Although the talks
recently ended, the separation could pave the way for H-P’s
corporate hardware and services business to ultimately be
combined with EMC, industry observers said.

The planned breakup is one that Palo Alto, Calif.-based H-P
and its investors have long contemplated. H-P came close to
hiving off its PC operation in 2011, when it announced the
ill-fated acquisition of U.K. software company Autonomy Corp.
H-P said then it was exploring a separation of its PC business,
only to decide two months later to hold on to it amid pressure
from shareholders, which led to the departure of then-Chief
Executive Leo Apotheker.

H-P in 1999 spun off Agilent Technologies, a maker of
electronic-testing gear and other hardware. Agilent
subsequently announced plans to break itself up.

In 2012, under current H-P Chief Executive Meg Whitman,
the company reorganized itself to combine the PC business
with its more profitable printer operation, helping pave the
way for the current plan.

Ms. Whitman is slated to be chairman of the PC and printer
business, to be known as HP Inc., and CEO of the other
company, to be called Hewlett-Packard Enterprise, said
one of the people familiar with the plan. Current lead
independent director Patricia Russo will be chairman of
the enterprise company, while Dion Weisler, an executive
in the PC and printer operation, is to be CEO of that business,
this person said.

In the 2013 fiscal year ended last October, the Printing and

Personal Systems Group, as it is known, reported $55.9 billion

in revenue, about half of H-P’s total. Sales for the operation

dropped 7.1% amid fierce competition, compared with a 6.7%

decline for company revenue as a whole. (odd they don't break
out PCs and printers, and talk profits)

Last year, H-P lost its place as the largest PC maker by ship-
ments, slipping to No. 2 behind China’s Lenovo Group Ltd,
according to industry research firm IDC.

H-P, founded in a garage in Palo Alto 75 years ago, has
been undergoing a multiyear restructuring under Ms.
Whitman in an effort to stem sales declines. Aside from
the PC and printer business, H-P’s revenue comes from
selling services and hardware such as servers and data-
storage systems to corporations, along with software and
financial services.

H-P’s shares have risen sharply since the beginning of

last year, but they remain well below their highs in recent

years—and the even loftier levels they reached during the

1990s tech boom (in common with virtually every other
high-tech firm still surviving, such as Intel, Cisco,
Microsoft, Oracle). H-P shares increased 2% on Friday to
$35.20, giving it a market capitalization of nearly $66 billion.

In response to lower sales and to provide a lift to its shares,
H-P has laid off tens of thousands of employees and cut
other costs. Ms. Whitman has sought to push H-P further
into growth pockets such as “cloud” software, but the
company has struggled to make headway in such areas.

The recent wave of breakups and spinoffs at technology
companies and in the wider corporate world has been
fueled by the idea that companies with a narrower focus
perform better. The moves in many cases have been
well-received by shareholders—and sometimes actively
sought by them.

Last Tuesday, online-auction pioneer eBay, where Ms.
Whitman was once CEO, announced a plan to spin off
its PayPal payments-processing unit. Shareholders
rewarded eBay’s decision, pushing the company’s shares
up about 7.5% that day.

—Shira Ovide contributed to this article.

CHH COMMENT: IT's ABOUT TIME

HP Phenomenon

Monday, October 6, 2014

Reactions-Roger McNamee

who is Dion Weisler?

Sunday, October 5, 2014

Si Valley Biz Journal about WSJ story

Report: Hewlett-Packard plans to

break into 2 companies

Thoughts about the 'split' news

This is BIG news

Hewlett-Packard Plans

to Break in Two

Split Would Separate PC, Printer

Operation From

Corporate Hardware, Other Units

Search This Blog