back to article Profit piranhas want a bite of HP

Private equity firms are circling HP, looking for a way to carve up the IT behemoth and make a few quick and easy bucks – just as they do every time a new CEO has trouble running the company. Bankers, brokerages, private equity firms, and other stockjobbers and moneylenders talk a good game about investing for the long haul, but …

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Trollface

Hummm.....

The sound of Larry's motorboat is coming to save your beloved company Matt?

KKR was twisting the thumb screws to ole ponytail.......

Where's our Larry icon??!! The one with him swimmin' in money?

Gonna miss ya SB! Take Care!

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Happy

TPM and his Big Blue Pompoms ride again!

So all hp's acquisitions are poor but they somehow helped hp overtake IBM as the largest IT company in the World? Strange that. And having a monopoly revenue stream like mainframes is great, like you said. As long as it stays healthy. The problem for IBM is the mainframe biz is shrinking, so much so that IBM is having to offer mini-mainframes in an attempt to stop migrations to other vendor's kit. The constant shrinking of the mainframe pool is a fact TPM has admitted himself many times. Meanwhile, the less margin-rich x64 sector is growing nicely, but IBM is being rapidly chased out of the sector by a rampant hp. How many lines has IBM offloaded to Lenovo? In the longrun, having a less-margin rich but much larger and growing sector will probably be of more benefit than having a shrinking one.

Then there is the laughable attempt to somehow compare IBM to Apple! And a dig at hp as being "people intensive". The latter is so funny as IBM has for years been trying to convert itself from a hardware company to a services company (because IBM also see that their hardware biz is under threat), and nothing is as expensively people intensive as services.

Yes, there will always be technically-illiterate people on Wall Street that will call for hp to be less diverse in the hope of making a quick profit. The same type of idiot applauded Schwartz's decision not to support Windows or x86 and to stay with SPARC rather than going with Itanium. By the time Sun realised they'd been stupid then and twice as stupid not to diversify later, those same Wall Street "gurus" had sold their Sun shares and bought hp ones instead.

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Unhappy

say again ?

people intensive industries ? so both companies love sacking staff and encourage resignations ?

Only people intensive component seem to be suits

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FAIL

RE: say again ?

"....so both companies love sacking staff and encourage resignations ?...." LOL! OK, for those either too stupid to remember, or just being willfully forgetful:

http://www.theregister.co.uk/2009/03/26/ibm_job_cuts/

http://www.theregister.co.uk/2010/02/11/ibm_job_cuts/

http://www.theregister.co.uk/2009/03/19/ibm_uk_contract_rates/

Oh yeah, Big Blue has never made anyone redundant - NOT!

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Facepalm

This is a long time coming.

In 1995, I went to an (NDA) talk given by HP. In it they lauded their future as a commodity computer company. Their "new' CPU ("Itanic" which they were developing with Intel) would allow them to sell computers to 'fill every need'. HP-UX or Windows, server room or desktop, HP had the computer for you. It seems as if they executed their plan (with updates, of course) well.

On the other side, for fiscal year 1999, HP revenues were up 17%, and profits increased by 16%. BUT, after the earnings announcement (which sounded pretty damned good to ME) HP stock fell $5.00 per share. In other words, Wall Street wants something (as expressed by analysts' predictions of MORE than a 16% growth) and punishes you greatly if you don't conform to THEIR requirements.

In other words, HP is most likely a company you can invest in, and reap rewards 5 or more years down the road. No problem. While Wall Street is still (apparently) stuck in the pre-2000 mode of requiring VERY high profit increases. And Wall Street has the temerity to punish you if you don't confirm to THEIR needs.

Time to FLATTEN and re-construct what we know as "Wall Street". It is an unbearable DRAG on the US economy, ESPECIALLY the future economy. [See General Electric under Jack Welsh, and his RADICAL curbing of GE's basic R&D. Plus the more than 50% stock price drop between Oct., 2000 and Feb, 2003 as a result of him leaving and his policies showing their REAL "return".]

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Big Brother

Well...

Really what do you expect? These people are trained to see government-fuelled bubble after bubble after bubble. So is the hoi polloi actually. The expectation of having "high returns, constantly" is by now in-built. It may lead to destruction of actual income generators to the profit of weird mutant fish like Facebook, estimated at 100 billion, but that's the toxic environment for you.

It's like the "Color out of space", fueled by Central Banks.

"Almost at the same time the mortality among the livestock commenced. Poultry turned greyish and died very quickly, their meat being found dry and noisome upon cutting. Hogs grew inordinately fat, then suddenly began to undergo loathsome changes which no one could explain. Their meat was of course useless, and Nahum was at his wit’s end."

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HP is badly integrated

In my opinion HP is a badly integrated company that makes little effort to develop a coherent cross product line strategy or exploit sales opportunities across its portfolio of products.

For example, if they could properly construct a sales message that combined the strengths of HP Software and the Servers & Storage business then they would have a very strong pitch compared to their competitors - 5 yrs or more after some major infrastructure management software acquisitions (incl. Peregrine, Mercury), this messaging still doesn't seem to exist.

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Flame

This is a long time coming...

Way too long... Wall Street is setting the expectation for companies, not the companies themselves... Time to tell Wall Street to take a hike, and to tax short term gains (held less than FIVE years, not just one year) at a rate of 90% or more to stop this "profit NOW" mentality. Sure, let them churn their stocks if they want, they just won't be able to buy as many Congressman with the remaining 10% of their "earnings". Wall Street's "profits" are not EARNINGS anyhow... it's all the result of greed and a total lack of ethics.

Thermonuclear explosion because we need to GET RID of Wall Street and all their counterparts and restore some sanity to the business world.

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Gimp

HPL

You do know that HP DOESN'T stand for Howard Philips don't you.....?

(Where's the tentacular icon?)

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Unhappy

Badly integrated doesn't even begin to describe it

The interactions between the different divisions inside the company might be best described as a game of "f*ck your neighbor". They compete against each other and the only time any integration happens is when it's forced from up top... which usually means one side benefiting at the expense of the other.

It's bad... really bad.

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Alert

Uncanonical unit alert!

I thought that ElReg's unit system covered everything physical, but stuck with the sterling for cash?

And now you introduce a rogue unit, the "bottle of Lafite 1787". Is this a one-off [comparing two rare beasts --- I've never bought neither of them]? Is this new policy now you're freer post-moderatrix-departure? We should be told.

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Boffin

A very good point.

Attention Lester Haines and Lucy Sherriff - your definitive guide to official El Reg units (http://www.theregister.co.uk/2007/08/24/vulture_central_standards/) contains no mention of a unit of monetary value.

The suggested "bottle of Lafite 1787" is unstisfactory, in that it's like the value of La Giaconda (the Mona Lisa to committed anglophones) - its value can't accurately be assessed unless it comes up for sale.

The Big Mac is already used by The Economist as such a measure ( I'd provide a link, but The Economist's website has been broken for some time now, and most page links just redirect to the current front page), but that's probably too volatile a value to operate as a standard.

Several possibilites spring to mind which would be immediately comprehensible to the average El Reg readers, such as the price of 1 bit (or 1 petabit, as appropriate) of flash storage, but all of these suffer from the inflationary phenomenon known as Moore's law.

Might I suggest we use the camel? This at least has an established exchange rate with the wife (3 to 1, I believe).

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Wall Street

Exactly - there's nothing like churning the structure of large companies to generate big profits for the banks who will sell the breakup as "stimulating innovation" - it's ironic really because how many of these "Masters of Finance" would have invested in a couple of guys setting up a company in a garage - especially since they didn't have a "business plan".

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Anonymous Coward

Breaking Up HP

Oh God, Not Again!

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Stop

"Best Shore"

EDS cut staff ruthlessly and HP has done more of the same over the years since that merger. Most of the teams in my area are now woefully undermanned while constant "Reorgs" continue to shunt managers around. My area makes a good profit but they are never happy and are pushing things to breaking point.

Wonder which logo will be on my ID Card in a year....

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probably....

You will have been replaced by an off-shore team by then :p

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Thumb Down

Wall street is a cancerous tumor

It needs to be excised and incinerated as such

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a great story, but wrong

It's not an acceptable solution for poor profits to just tell investors that if they don't like it they should sell. That's akin to somebody siting a pig manure pool next to your house and saying that if you don't like the smell you should move.

In fact if major investors don't require some discipline from management who will?

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reporters?

or commentators. doesn't matter. this story is just full of shit, as shown by the authors comments on it. won't happen, shut the fuck up dimwit, go stand in the corner with the big pointed hat with a capital d on it.

El Reg, where has the integrity gone, now you're just publishing speculation and bullshit.

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(Written by Reg staff) Gold badge

Re: reporters?

Big private equity firms want to break up HP because they think they can make money out it.

You say it won't happen, so therefore we shouldn't report the story or add our comments that it shouldn't happen.

ODFO.

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Headmaster

Sharks..

Well, Larry drew some blood from HP with his whole "cancel Oracle software stack for Itanium" thing. And when there is blood in the water, the sharks from Wall Street comes sniffing, for some cheap meat. And he did put the fork in the BCS crown jewels, so to speak.

But IMHO there is not a lot of meat to be had. Cause although HP's BCS division is pretty much showing a flat revenue, I personally don't think that HP can back out of that business, as the BCS revenue indirectly gives HP a lot of revenue in other parts of the company

// Jesper

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Save Us....

What do banks or brokers know about running businesses in the real world, they exist in a rarified place where all their risks are mitigated and losses underwritten by the tax payer.

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