A few weeks after Hewlett-Packard disappointed Wall Street for the first time since its $19 billion mega-merger with Compaq, an influential stock analyst has told clients he sees the eventual breakup of the company. Steve Milunovich, who follows big computer companies for Merrill Lynch, said he thinks HP will have to spin off its printer business or separate its consumer business from its corporate business.
Analyst Predicts Breakup of Hewlett-Packard
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Eugenia Loli
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…a company becomes so big by swallowing other companies and then breaks up.
Maybe it’s suffering from indigestion?
Anyway a leaner, meaner HP could be a good thing?
Who cares whether this Wall Street guy gets his “full investment dollar” for the printing business? HP has to do what’s best for the company, not for short-term investors.
HP has to pick its spots and might kill some businesses and product lines, but I don’t see them spinning off the client hardware stuff. If they did that they’d just be another enterprise systems and services vendor with no cachet, one of the “bunch” behind IBM and Microsoft. Besides, there would be a big argument over which split would be called “Hewlett” and which would be “Packard” ;.)
Buy sco, drop windowZ it’s the source of all indigestion, and serve linux as your only main meal, now you have a leaner, meaner leader who may make real money from linux.
I genuinely hope that Compaq and HP separate and go in individual directions. Compaq was excellent to deal with, provided first-class support, and their website was far superior to the mess that is HP. HP, on the other hand, has historically produced shoddy computer wares for the average consumer (servers are OK) and I can’t stand their sub-par level of service.
It certainly would be nice if Compaq reverted to pre-merger management and engineering, and HP were left by the roadside.
Who cares? HP is offshoring their company, from Australia to the USA, everything is being transferred to India, China, and Eastern Europe.
The natural endpoint for technology companies is just a brand. The technology becomes nothing more than a commodity.
HP doesn’t “invent” anything anymore… to the point they had to use that tired old horse of the new world order political machine “proclaim to be the opposite of what you are”.
Unless a person worked for HP (and was in line to loose their job), why would they care?
Milunovich favored the HP – Compaq merger. Today, he complains some divisions aren’t managed as they should. Isn’t he confused ? After all, swallowing a competitor has rarely eased things for CEOs.
I think when Fiorina was busy playing moghuls, she forgot one tiny detail : Compaq was still having gastro-intestinal problems (and nightmares) caused by their acquisition of Digital.
A most suited title to the article should have been : “CEOs will never get a clue”. It sounds like another fiasco (a double whammy, mind you) : Time Warner and its sequel, AOL Time Warner.
Looks to me like HP is being positioned as a pure M$ device/service integration company. Any business units not in step with M$ software development will probably be sold or spun off sooner rather than later. Do printers have a future in a paperless world? HP probably doesn’t think so and will likely sell or spin off its printing business.
Take it with a grain of salt when HP top management starts touting Linux, or Bluetooth, or some other technology not in step with what M$ is doing.
>>Do printers have a future in a paperless world? HP probably doesn’t think so and will likely sell or spin off its printing business. <<
Call it a difference of opinion. I think printers will be around for a long time, and HP makes more profit selling inkjet cartridges than anything else. I think the printer business is the *last* thing HP would spin-off. HP would spin-off the PC business first. PCs are, at best, very low profit margin.
Will they split off the ink cartridges business to create an uber-profitable subsidiary? That part of HP’s business is what keeps them afloat, selling a few cents worth of ink for approx $30 each.
If HP were to truly outsource their entire company as you say, invention would be the last thing to go. Think about it. If HP’s competitive advantage, as Carly F. likes to say, is how much easier it is to use HP’s diverse products in concert than it is to use a handful of third-party products together, why on earth would HP hand over the ticklish responsibility of making that happen to thirty different entities around the world? It wouldn’t make sense.
I keep hearing HP fanboys, yet, where is the middleware? IBM has a great middleware setup that can run on Linux, AIX and Windows. What ever you want as a customer, they can provide you with AND sell you the necessary stuff for you business.
What can HP provide? cheap PC’s, inferior printers, crap handhelds, clueless support and a website that could make a grown man cry. After the last HP printer I bought and the numerous HP PC’s I have serviced, I have sworn that I would NEVER touch another HP product again. I want a printer? I’ll get an Epson. If I want a hand held, I’ll get a Handspring. If I want a PC, I’ll look at IBM, Apple or Dell.
As for someone prasing Compaq, bloody hell. Compaq was that MORONIC company who bought two WONDERFUL companies; Tadem and DEC, then rapped, pillaged and ruined what intellectual property they had aquired THEN they proceeded to sell if off to Intel then went back to its old ways; yet another zero innovation, Microsoft sycophant driven products which dipped in and out of profitability like a yo-yo.
All HP has done so far is bought out Compaq and continued down the same road. Zero innovation, cost cutting, sucking up to Microsoft and investing zero into any long term software or hardware stratergy.
Phillip you don’t work for the CSC do you? all the PC support jobs have or will be shortly, outsourced to Canada and India. The rest of the support jobs are going as quick as Carly can get them shipped out.
Disclaimer: My opinions may be biased, etc., etc.
My father was a public school teacher, and it’s comments like CooCooCaChoo’s which remind me of one of his sayings. “At every parent-teacher conference, I hear parent after parent tell me, ‘I want the best possible education for my child!’. But none of them are willing to actually pay for it.”
People say they want the highest quality PCs, OSes, printers, handhelds, servers, and software on the planet. But none of them are willing to actually pay for it.
Quality and innovation and jaw-dropping technical support add to the bottom line. And the only consideration many people seem to have in today’s economy is the sticker price, not the experience afterwards. Don’t blame HP for giving the customer what he wants instead of what he says he wants. You can’t succeed if you don’t sell.
“Quality and innovation and jaw-dropping technical support add to the bottom line. And the only consideration many people seem to have in today’s economy is the sticker price, not the experience afterwards. Don’t blame HP for giving the customer what he wants instead of what he says he wants. You can’t succeed if you don’t sell.”
Well I’m certain that’s part of what ails the world. There’s also simple greed on the part of corporate managment, to fill up the rest. So there’s still some room for criticism about corporate behavior.
It’s too easy to fall into the trap of blaming upper management. I’m rank and file, and I catch myself doing it, too.
However, consider what you would do if you were upper management, faced with a table-thumping board of directors and a horde of Wall Street investors with the Walter Hewlett mindset that the only duty of a company is to provide a profit for its shareholders. If you don’t provide a profit, it’s your job, and they’ll just hire someone else to take your place who will.
Would you do everything you possibly could to make the company competitive and profitable, even if it’s something you didn’t necessarily think you’d do in a different environment? Or not?
bob,
CSC is loosing work because the level of support they offer
sucks big time.
I remember having to deal with them in my previous job.
An absolute nightmare. I feel for the guys who lose their
jobs but I certainely won’t miss CSC.
Phil
Whatever happened to upper management that had vision? They may be few but they are out there. I’ve also heard of companies that have told shareholders that if they don’t like what the direction the company is taking, they are free
to sell their stock.
The bottom line is tech companies have to balance their own vision and expertise with the demands of the market – and they have to have the balls to stick to their guns.
If all that was required to lead a company was to be a shareholder lackey, I’m sure there are many qualified middle managers who’d work for a fraction of the salary of the top brass – savings that would also contribute to the company’s overall profit.
However, consider what you would do if you were upper management, faced with a table-thumping board of directors and a horde of Wall Street investors with the Walter Hewlett mindset that the only duty of a company is to provide a profit for its shareholders. If you don’t provide a profit, it’s your job, and they’ll just hire someone else to take your place who will.
Would you do everything you possibly could to make the company competitive and profitable, even if it’s something you didn’t necessarily think you’d do in a different environment? Or not?
Yeah, they need to fix their website. It only takes me on average about an hour and some registration to find patches for HPUX. Not like my time is valuable for anything.
Yes, Hewlett-Packard is no Apple, if that’s what you mean. Not everyone can get the sweet setup (absolute 100% control) that Steve Jobs has, you know.
“Yes, Hewlett-Packard is no Apple, if that’s what you mean. Not everyone can get the sweet setup (absolute 100% control) that Steve Jobs has, you know. ”
Are you implying that only those with total control can have a “backbone”?
“Are you implying that only those with total control can have a “backbone”?”
Pretty much so, yes. It is hard to take big risks for the sake of corporate innovation when you have to answer to some board (which tend to be notoriously conservative in most large companies) and engage in constant political in-fighting with them if you want to do anything even remotely radical (like the battle within HP when it wanted to buy Compaq in the first place, remember?). Jobs never has to deal with these kinds of things so he doesn’t have that pressure to follow what the rest of the industry does.
Most of all so-called “brilliant corporate strategy” is nothing more than focusing on controlling costs anyway (witness Dell or Wal-Mart) and a lot of CEOs are just ultra-glorified bean-counters who are also well connected within the “Establishment” (i.e.: fiscal aristocracy).
Disclaimer: My opinions may be biased, etc., etc.
My father was a public school teacher, and it’s comments like CooCooCaChoo’s which remind me of one of his sayings. “At every parent-teacher conference, I hear parent after parent tell me, ‘I want the best possible education for my child!’. But none of them are willing to actually pay for it.”
People say they want the highest quality PCs, OSes, printers, handhelds, servers, and software on the planet. But none of them are willing to actually pay for it.
Quality and innovation and jaw-dropping technical support add to the bottom line. And the only consideration many people seem to have in today’s economy is the sticker price, not the experience afterwards. Don’t blame HP for giving the customer what he wants instead of what he says he wants. You can’t succeed if you don’t sell.
Nothing has ever stopped HP from purchasing Sybase, Corel or any other numerous vendors out there who have great products but simply need some extra TLC to put them into a viable-alternative-to-the-status-quo position.
As for innovation and price, I am not expecting bargin basement prices but what I do expect are servers which don’t have expensive and complicated BIOS’s, half located on the chip, half on the HDD and half some where else and their desktops, talk about crap. They wonder why their PC business didn’t turn a profit. How about learning the art of “less is more”, “simplicity equals cost savings”. Having serviced a HP PC, it is though their main goal when they create a PC is to make it as bloody complicated as possible.
Out of all the PC’s ever sold, both Windows, FreeBSD and Linux all choke to pieces on an HP. Compare HP to Dell. Dell sticks to industry standard motherboards, BIOS’s, memory, hard drives, graphic cards etc etc.
As for Apple being proprietary (someone else bought up), all of their hardware can be purchased from any number of companies, the only downside is that you have to buy them in 10,000 lots. Everything in the Mac is openstandard, OpenBoot, IDE, AGP, SDRAM (DIMM), USB and firewire. If you want to develop and operating system for it, no problems, look at the hardware specs and implement it. Just because you (the PC assembler fan boys) can’t assemble a Mac, doesn’t mean that it is proprietary.