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back to article HP writes down a whopping $8bn from EDS gobble

Hewlett-Packard has taken a fine-toothed comb to its Enterprise Services business and said it needs to write down $8bn in goodwill assets - presumably most of which come from its $13.9bn acquisition of services giant Electronic Data Systems back in May 2008. HP, which is restructuring, also announced that John Visentin, who was …

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8 Bn?

It's a good job they are doing so well with all the other parts of the business.

oh, hang on...

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Joke

Re: 8 Bn?

Good news really, it's less than half of what the UK taxpayer has lost on the Olympics

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My POV on HP - my Forrester blog from this week

I am sure you’ve all consumed the numerous stories about HP over the last 18 months: CEOs being fired and hired in an almost show-business fashion; a board not paying enough attention; business strategy speculation (is the PC business in or out? – imagine this, for a while, the PC business unit actually ran ads arguing against their CEO’s plan!); multiple tablet announcements, and withdrawals; plus a long list of failed, mistimed, or simply stupid acquisitions. Clearly, many journalists, who are not technology market experts, now see HP as being run incompetently.

Even those working for the satirical magazine The Onion feel that HP is ripe for a satirical video, which really makes fun of HP’s latest cloud announcement. There has certainly been a plethora of announcements from HP on cloud computing in recent years – I get all the press releases and often the briefings. I know that these are announcements made by different business units within HP and I am able to keep them in context because I know the company so well. It shouldn’t happen that they are so uncoordinated, but I’m used to it (it is the same with their partner program announcements). But other people do not know how the corporation works; certainly not the journalists.

So when a satirical magazine, not at all focused on technology but more oriented toward making fun of brands or famous people, decides to poke fun at HP because of a technology press release, I see that as a sign that the market perception of HP is seriously damaged. What are the points made in The Onion’s video? That HP has not innovated for many years; that it just uses the “cloud” word to try to sound interesting; and that it (HP) does not really know what it’s doing.

The problem is that many other observers have adopted that point of view as well. Pretty soon, HP will be generally considered to be a badly run company.

Reality becomes perception!

Isn’t anybody in marketing seeing this? After all, they are responsible for the perception – or correcting one that may have got awry. As I said above, the only marketing that comes across is at the business unit level: usually “InsideOut” content about HP products and services. In March, HP appointed a corporate-wide CMO and it sounded as if the cacophony of HP marketing efforts were (I assumed) being centralized, or at least, going to be better coordinated. But I visited HP in Palo Alto last week and it is clear to me that few, if any, strategic brand marketing decisions are being made. There even seems to be an underlying excuse for non-activity: “We are waiting” was a common apathetic sentiment. There were also other organizational speculations galore, but I won’t go there.

What do you think? Shouldn’t HP marketing step up to the plate and protect the brand values? Do you agree that these are now damaged or even already down the tubes? I do. Could a marketing campaign even save HP now from the perception - or from being broken up? Well, IBM’s eBusiness campaign in the late 1990s did save that company; changing the outside image as well as driving radical change internally. Dassault Systems, with the Collaborative Tribe campaign a few years ago, was able to transform itself both externally and internally too.

As always, I’d love to hear from you on this and other topics. Always keeping you informed! Peter

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Anonymous Coward

Re: My POV on HP - my Forrester blog from this week

Its going to take a lot more than clever marketing to get us out of the hole we are in.

It is clear now that Hurd burned the good bits of EDS to make a gain in the short term. 2 CEOs later we are left with a weakened company with a board that refuses to see that it is the problem, not those who do the work.

Im still completely amazed that the enormous cock-up that was the Autonomy purchase was allowed to happen.

There needs to be serious top down change if HP is to survive and revive its culture. Anyone see that happening under Meg ?

Still at least we still have 7 corporate Jets so the board can take there families on Jollys at the weekend.

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FAIL

Re: My POV on HP - my Forrester blog from this week

"Its going to take a lot more than clever marketing to get us out of the hole we are in."

Indeed. Although arguably marketing got you into this hole, by over promising whilst the rest of the business under-delivered. So in the ITO/BPO areas, HP's sales and marketing guys go round promising brillant service and minimal costs; the client eventually finds that like for like costs go up when they outsource, and the service deteriorates. In the executive suites HP have been quite effective at both selling this promise of HP's Magic Sauce, and to an extent covering up the crap service. My company's main board outsourced a lot of their IT to HP, and the service is even worse than when we did it ourselves, and the cost of infrastructure services and desktop is now much higher (concealed by former HP-ers within my company who have slashed to IT investment budget to conceal the reality. So not only do we get rubbish service from HP, we've got a number of HP's useless cast offs as our senior in-house IT management.

It is clear that HP have a cost and performance problem, and that's driving their poor reputation (made worse by their serially inept board, and giga-failures in the M&A space). Arguably HP is dying on its feet, buying revenue, and hoping that nobody remembers the huge writedowns. Indeed, a snippet from the NYT: In the past decade, HP has spent $67billion on acquisitions, close on double its current market value. They bought and wasted Compaq, bought and wasted 3Com, bought and wasted Palm, bought and wasted EDS, and they bought and wasted Autonomy in record time, although we're still waiting for the multi-billion write off to be declared on Autonomy. HP's board, senior management, and advisors should go to jail for malfeasance of this scale.

Unfortunately, the current recipe of "promise the earth, deliver rubbish offshore service, pocket fat margin to then waste on corporate inefficiency and acquisitions" isn't working and never will. HP need to stop being an exporter of jobs to the third world, need to provide excellent customer service, and need to have their eyes poked out if they so much as look at another acquisition. As a vast, badly run conglomerate, I suspect that the only way out is not to sell the PC division, but to demerge all of the major divisions as separately listed corporations, and make the divisional managers understand that they live or die by their own hand.

I think Meg is clever enough to get this, I'm not sure she can persuade the loafers and parasites around her that this ghastly conglomerate cannot be saved in its present form. In her case I'd be talking to major investors in person, discussing the strategic options, and then present it as a fait accompli to the board. I'd bring in PE houses as co-investors in the new corporations, because existing management is clearly so weak, and the better PE houses can provide the talent. and match performance and rewards.

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Vic
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Re: My POV on HP - my Forrester blog from this week

> present it as a fait accompli to the board

I read that as "fail accompli". And wasn't surprised...

Vic.

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Anonymous Coward

Sad times

I can tell you, and i'm sure many can back it up, that morale throughout HP is at its lowest of all time.

If managers aren't desperately looking for people to fire, in order to get their rating up, then they've fallen into a coasting mode and barely do anything, just waiting for the axe to fall, as they've seen happen to all their friends and co-workers for the past two years. Thats just the managers, the troops on the ground are beyond caring now.

A completely fucked company, rotting from within.

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Anonymous Coward

Shit company

I went on the call to all of the ES division with Meg and Nefkens before. By the sounds of it we are in for more totalitarian cost saving measures, more 'not enough bonus pot this year even though you have worked all the hours god sends to get the job done' and more redundancies than the 27000 already announced.

The shareholders deserve everything they get as they let Hurd get away with running EDS into the ground.

Those of us left over are waiting eagerly to be spun off from this printer ink company, as at least then we will get some competent management.

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Anonymous Coward

"Shouldn’t HP marketing step up to the plate and protect the brand values?"

Of course they should.

So long as it is based on protecting the brand values by delivering good value well designed+made product (and/or well designed+delivered services).

Now, what are the odds on that?

Or, is "protecting the brand values" just a shortform for yet more pointless paper shuffling or online equivalent, such as the disastrous restyling and reorg of the HP IT Resource Center website.

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EDS - HP

I've previously bought HP as I thought the products weren't that bad; generally they are competitively priced and the quality has been more than OK.

But in the last few years, that has changed dramatically. We've seen some really shoddy products, support that rates "dreadful" at best and very questionable consultancy advice on key issues.

But now, I have had the dubious pleasure of dealing with EDS. **** my old stump, what an absolute shower of *****. Drones manning their "helpdesk" that have barely sufficient knowledge even to create a ticket to be passed onto second or third level support. Truly shocking methods of managing systems that appear to have been developed a decade ago. Nothing is aimed at supporting the customer in any way, shape or form.

If anyone ever tells me that their company is using EDS for services, I will run faster than Usain Bolt in the opposite direction. Anyone who freely chooses EDS, deserves everything that will happen to them; and if I had my way, I would sack any twerp that chose to buy into their service as they have to be certifiably insane to consider it in the first place. I believe that I could achieve more by employing a group of kids from the local primary school; at least they might have some basic PC knowledge.

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Re: Usain Bolt reference

Somewhere, in my cube, I am:

Rolling

On the

Floor

Laughing

My

Ass

Off --

Pissing

In

My

Pants

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Anonymous Coward

Re: EDS - HP

Seems the industry has got the same opinion and HPES is having real problems signing new deals.

You do know EDS is no more and HP managers with little to no experience of services have been running the show since 2008 ?

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Blowing $8B out the door

At lunch today, with my direct boss (the CIO) and the CEO/owner in attendance, this subject came up.

I posed this question to the CEO/owner:

If you, as the majority stockholder of our company, saw that your (non-stockholding) CEO inflicted this level of financial pain to the companies' net worth; what would you do about it?

Her reply was:

I'd do a "Ballmer" and make damn sure his ass was in the chair as it sailed out of the top (fifth) floor window. I would make sure that his employment contact had a clause in it that would allow me to get rid of him without severance pay or benefit in the event of such a serious clusterfuck.

Then she said:

Now, you know why I run this company, as opposed to just hiring some fuckwit to do it for me.

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FAIL

cant be true, we have ITIL processes

says it all. IMNSHO, HP senior PHBs want HP to be just like IBM, but do not have the ability to get stuff sold quickly and on the customers floor, working. So much process, so much indifference.

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Windows

Only $8B? Maybe 6 more for Autonomy by the by

They don't look likely to make a good return on that one either.

Dealing with HP has been pretty messed up lately, and I don't see a change in course here.

/And by the way... that's enough money flushed down the toilet to put a man on Mars.

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This post has been deleted by its author

WTF?

Mark Hurd is like herpes

He's the gift that keeps on giving long after he's gone... Over paid for EDS, gutted the company prop up the balance sheet, bought Palm which was shutdown 18 months later. .. Got HP embroiled in a nasty fight with Oracle.. Why is this guy still in an executive position?

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Anonymous Coward

HP Grunt

Like many others I just keep my head down, do the best job I can and take the money home. Any sense of Loyalty or Job Satisfaction went out of the window long ago when all the corporate messages started to be about what you can do for the company and not what the company can do for you. Most of the people I work with are looking for that killer opportunity so they can apply for VR (sorry "Expression of Wish")

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