HP must throw its PC biz overboard to survive, says analyst A UBS analyst has said Hewlett Packard should shed its PC and printer biz in a report that reopens old and sticky wounds. Rumours of a PC biz spin-out first surfaced last year, during former CEO Leo Apotheker's reign. By contrast, current big boss Meg Whitman has famously likened any spinoff of the units to breaking up a …
Cutting a profitable business that allows them to vertically integrate in the enterprise, very forward thinking. There are significant economies of scale involved in the production of hardware. Wall street , slash and burn for next quarters profits! Thats what got HP into trouble in the first place. There was a time when HP concentrated on execution and R&D. They need to get back to that.
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Hear, hear!
What they need to be doing is providing support that's good enough to serve as an additional plus point to their hardware. They already do this for their large-biz printer gear, but they're inconsistent on the computing front.
Of course, some bellend-brained analyst will always favour what gets next-quarter results (even if it sinks the company) over what will help the company right itself over a longer period. It's not like that sort of thinking helped sink Kodak or anything, is it? Oh, wait...
"Wall street , slash and burn for next quarters profits! Thats what got HP into trouble in the first place."
Having been in HP first hand in the last five years, I can assure you that the "slash and burn" were needed, given the large number of social loafers throughout the company. Far too many people getting by on the achievements of the few. Unfortunately, there was no culture change to coincide the reductions-in-force, so those loafers remaining never received any motivation to change.
Frankly, the whole thing needs to be blown to bits, because existing management from the front-line to the top are glad to produce mediocre numbers as they have been for years and the remaining employees are completely demoralized. This simple fact particularly eludes HP shareholders, who clearly don't understand what a colossal mongolian cluster-fuck on which they've wasted their capital.
/former-hper-rant
you missed something. HP managers don't know how to run an IT services firm. EDS had problems but nothing as bad as what the combined mess has become. Culture change would have to include the idea of pleasing customers, something no US based company of size seems to grasp anymore. I hear numbers of remaining skilled staff are trying to leave quickly. However staff loses are always seen as a positive in HP land so it won't register as a problem no matter how bad it gets. Yes, HP HR have said turnover rate is too high, but what else would they say ?
> Culture change would have to include the idea of pleasing customers
I had a meeting with HP a few weeks back.
Well, when I say "meeting", it was actually a monologue from the HP manager. No-one else got a word in. But I did learn 10^27 new management buzzwords.
He was most surprised to be told he hadn't understood our requirements...
Vic.
HP, Dell, Lenovo, Asus and Acer all together don't make as much profit selling Windows PCs in a year as Samsung made last quarter selling Android phones. And their software vendor wasn't competing with them at that time.
HP could probably find work to do that has a better return on investment and effort than a measly 5% operating income a year. Apothaker was a chowderhead, but about this one he was right. IBM's move to shed their PC division right before the launch of Vista was a stroke of brilliance. They got Lenovo to pay them a mountain of money for a money losing business. With W8 looming large and looking like a stinker HP had a chance then to line up a buyer, and now they don't.
The focus of many US businesses on short term profit is slowly but surely destroying the US economy. Businesses in many of other Western nations are also doing the same and have been for far too long.
Wall Street analysts like the guy responsible for this recommendation are only hastening the dominance of the Chinese economy. What will Western businesses do when they've sold and outsourced everything?
It sounds like HP needs to streamline it operations and business units. It doesn't need to throw the baby out with the bathwater.
HP's printer business ought to be able to survive a spin-off. It might even thrive by returning to the original HP company ethos. There's no synergy I can see between the design and manufacture of printers and that of PCs. Indeed there may be negative synergy. A competing manufacturer of PCs is hardly likely to bundle an HP printer (ie directly support a competitor) when it can bundle one from Lexmark, Kyocera, or several others who aren't competing to sell PCs.
Must be because it's on Channel Reg-Lite. Does no one remember Steven "The Loon" Milunovich, scourge of Carly Fiorina and Scott McNealy, nemesis of Ashlee Vance, named by Forbes.com in 2005 as the world's greatest hardware analyst? He left Merrill Lynch, came back and left again between 2005 and 2008. His form on HP is the stuff of legend, and now he's regenerated at UBS. Oh joy!
Check out http://www.theregister.co.uk/2004/06/07/loon_hp_split/ for example.
Meg is a waste of time. Doing nothing while HP continues to loose market share, while the market is moving to tablets, while Lenovo is eating HP's lunch is not what she is being paid for.
Fire her, and fire all her direct reports. They don't have a clue.
HP sells 22 different desktop PCs; Why? Apple sells 2 - big screen or little screen.
HP has not invented anything or delivered anything new in 5 years. What has it been doing all this time.
I am afraid this is the start of the end and there is no way back. Stand back, this is going to be messy.
"....HP sells 22 different desktop PCs; Why? Apple sells 2 - big screen or little screen...." Because hp sells many more PCs to a wider selection of consumer and commercial users rather than just the Crayola department and fanbois.
"......HP has not invented anything or delivered anything new in 5 years....." Go read up on the memristor tech. I assume you missed that because you were too busy picking out black rollnecks?
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That comment is like saying there's no future in transistor technology two years after Brittain, Bardeen and Shockley invented the things!
(And with the benefit of LOTS of hindsight you'd have been right ... the real breakthrough technology was CMOS, and the field effect transistor was invented as a theoretical possibility by Prof. Sir Neville Mott back in the 1930s, when the technology to actually make one did not exist).
It'll be quite a fewl more years before memristors appear in actual products. However, HP owns the patents, and HP (or whoever it sells those patents to) should do very well out of them.
When I started work in the 80s HP were the byword for quality. My HP11C calculator gets almost daily use and is still going strong. The first computer I used was a 9826 (the second one was a 9836!) - a fantastic bit of kit for its time for everything from controlling test gear to running FE analysis. Nearly all the test gear I used was HP and all the other manufacturers just had to answer the question "is it as good as its HP equivalent" before I'd even talk to them about an alternative.
On the basis of these formative years when I first bought a laptop I paid a premium for an HP product - and bought an HP printer to go with it. They were rubbish. Poor build quality, poor performance, impossible to get them to work together wirelessly and no support whatsoever. The PSU was recalled twice due to danger of it bursting into flames. Full reboot needed to get a DVD to play. Screen hinge useless after 6 months. Printer impossible to use wirelessly and scanner function intermittent. I learned my lesson; both were consigned to the bin after less than a year of use. I'll never buy another HP product again - unless it's a vintage HP11C to replace mine should it get run over by a tank - and the tank comes off best. Good riddance to them.
"when I first bought a laptop I paid a premium for an HP product - and bought an HP printer to go with it."
Did you buy from the consumer range or the business range?
My first printer was a DJ500. I still have a DJ970 (2003?). Both business class product. But the two HP consumer printers I bought after the DJ970 lasted months rather than the decade the DJ970 has lasted so far, and resulted in me vowing to never touch (or recommend) HP printers again.
Then there's laptops. I've had CPQ laptops, business class ones, since the days of the Armada E500 (2002). They've been OK; in fact I recently replaced my vintage-2007 one (chosen partly because of its official Linux support) with a more recent one (but not a brand new one), and I did this in part because I suspect that the Compaq business laptop influence is long dead and the HP cuts will have affected business laptop product quality and support, same as the cuts affected HP printer quality long ago.
Another vote for the DJ970. Mine still going strong, though a bit slow by today's standards!
Also for the Officejet Pro range, from the K550 through to the 8000. (I don't yet have the current 8100 model to play with, but I've heard from others it's a worthy successor to the 8000).
Cheap printers are always a false economy. They're built down to a price rather than up to a standard, so that they can be bundled (given away) with PCs, or piled high in supermarkets at Xmas for the clueless to buy. Then you pay through your nose over and over again for tiny ink cartridges. When you are deciding which printer to buy, include the cost of consumables for five years of use, and assume usage will increase with time. This advice applies to all manufacturers, not just HP.
News flash: HP designs many Medicaid (a US version of NHS for those on the dole) systems. They have a whole division just to do that.
At least desktops, laptops, and printers are all products you can get at your local computer store.
See https://www.google.com/search?q=hp+medicaid for all the medical insurance design pies HP has its fingers into.
I mean, seriously? Exit hardware to enter cloud computing? Heh... I mean, there's just not anything that would differentiate HP from the other huge quantities of virtual computing services providers already out there. The one differentiator right now is having data centers and failover software with a known reputation, which HP does not. The one differentiator for HP? Making their own hardware could help with costs -- but not if HP dumps that line of business!
Do you have poorly thought through ideas on how various tech companies could be doing things differently, but no-one listens to you? You should consider a new career as an industry analyst!
Through our simple 3 step programme, you too can prognosticate with the pros.
1) Find a company that's having problems. Or doing really successfully. It doesn't matter which.
2) Announce loudly to everyone how they could be doing better if they just listen to you.
3) Wait three months, and tell them how their sudden turnaround, or unchanged performance proves you right.
I've clearly been listening to too much Radio 4 Extra.
It's now well-known that's how to make a fortune in finance.
Gamble with someone else's money. If you get it wrong you're fired. If you get it right, you're a star. Your salary goes up and you get put in charge of a bigger pile of someone else's money.
Repeat about six times and you have a 1/64 chance of becoming a squillionaire mega-star fund manager. Fail and you'll probably still be retired at 40 on a better pension than the rest of us.
Nothing seems to rile punters more than discussion or public comment on either Microsoft or HP. Die hard followers who cling to HP or Microsoft's apron strings are forced to do so as they either have no other choice or find it difficult to broaden their vendor profiles. Those that have an in built hatred have undoubtedly been hurt personally or have vested interest in seeing ether hurt. Analysts are there to question or praise performance, judgement and direction and businesses and institutional investors take them very seriously. Ultimately, HP''s results medium and longer term will show who was right. EDS, prior to its acquisition by HP had been an inherently very profitable business.
Not too sure where you're going with that. This particular analyst has been recommending various permutations of HP breakup since at least 2004. Maybe one of his schemes was right, but who will ever know?
When Apotheker tentatively suggested HP should sell or spin off its PC business, he had a wealth of evidence, from "research notes" down the years, that it would be welcomed by analysts and shareholders. Instead HP's share price tanked, he lost his job and Whitman canned the idea. Raising it again so soon is disingenuous at best.
Milunovich also had it in for Sun, although, in that case, if McNealy had taken some notice of his infamous open letter, maybe things would have turned out better. (I'm really looking forward to an open letter to Larry Ellison - and his reply).
http://articles.latimes.com/2003/oct/03/business/fi-sun3
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