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It is astounding how people, WSJ contributors inclusive, only see HP as a pusher of cheap laptops and crappy inkjet printers. Assuming I'm reading these number

by ansy 15y ago

It is astounding how people, WSJ contributors inclusive, only see HP as a pusher of cheap laptops and crappy inkjet printers. Assuming I'm reading these numbers correctly[1], the PC division posted earnings of $567 million in Q3 2011. Compare that to $1.2 billion in earnings on enterprise services, $699 million from enterprise hardware, and $892 million from printing and imaging. Revenue from commercial printers was twice the revenue gained from consumer printers. All told, while the consumer business is a respectable chunk of change even to HP, the consumer business has the thinnest margins, is shrinking, and at the end of the day earns much less than the enterprise side of the house. HP makes a killing on enterprise services already. More than double the earnings of its entire PC business. Buying high margin software products like Autonomy for its services division to push on customers is easy money. The fact that HP's software business only earned $151 million on $790 million in revenue in Q3 2011 is a tremendous lost opportunity. HP is not a consumer company anymore. It doesn't need a consumer oriented CEO. It's an enterprise company that needs an enterprise CEO. Yet somehow, even "financial commentators" fail to recognize any of this. A very disappointing article from the WSJ. [1] http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-newsArticle&ID=1598003 http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-n...

bradfa 15y ago
Sounds like HP is doing what IBM did not too long ago. Getting out of commodity markets and into markets where profits are higher and it's easier to differentiate yourself from the masses. IBM is still strong in what they do even though they got out of the PC business and pretty much everything else consumer focused. Now HP is doing the same thing and they're getting torn a new one. Plus, figure that even if the consumer business made about $800 million last quarter (between PCs and printers), selling those businesses off for a couple billion, putting the cash in the bank, then laying off all the employees (or transferring them to the buyer) will fill the bank account, reduce head count (and expenses), and allow for more focus on less products that each have higher margins. Putting it that way, it sounds like combining the Apple and IBM business models to me. Simplify and specialize, focused on the enterprise (where the money is these days).
ScottBurson 15y ago
Agreed, the column is ridiculously biased. The author thinks Hurd was so great, but it was Hurd who first paid over $1B for Palm and then, when asked what HP's plans were in phones, said "Oh, we only bought Palm for the IP". Apotheker isn't perfect, and there have been missteps to be sure, but on the whole, as an HP employee (recently, via the Fortify acquisition), I think Apotheker has a much better plan for HP than Hurd or Fiorina did.
deepGem 15y ago
Well, first of all HP is not seen as a pusher of cheap laptops and crappy printers. (Check out the Envy14 and you'l l know why). Next, expanding into more profitable software avenues need not always come at the cost of abandoning the core ideology of a company. To repeat what IBM did nearly 10 years ago today says something about the leadership - copycats who can't be more innovative. I think the recent changes are driven by the CEO - who knows only how to run enterprise software and the article is spot on regarding that aspect.

by ansy 15y ago

bradfa 15y ago

Sounds like HP is doing what IBM did not too long ago. Getting out of commodity markets and into markets where profits are higher and it's easier to differentiate yourself from the masses. IBM is still strong in what they do even though they got out of the PC business and pretty much everything else consumer focused. Now HP is doing the same thing and they're getting torn a new one. Plus, figure that even if the consumer business made about $800 million last quarter (between PCs and printers), selling those businesses off for a couple billion, putting the cash in the bank, then laying off all the employees (or transferring them to the buyer) will fill the bank account, reduce head count (and expenses), and allow for more focus on less products that each have higher margins. Putting it that way, it sounds like combining the Apple and IBM business models to me. Simplify and specialize, focused on the enterprise (where the money is these days).

ScottBurson 15y ago

Agreed, the column is ridiculously biased. The author thinks Hurd was so great, but it was Hurd who first paid over $1B for Palm and then, when asked what HP's plans were in phones, said "Oh, we only bought Palm for the IP". Apotheker isn't perfect, and there have been missteps to be sure, but on the whole, as an HP employee (recently, via the Fortify acquisition), I think Apotheker has a much better plan for HP than Hurd or Fiorina did.

deepGem 15y ago

Well, first of all HP is not seen as a pusher of cheap laptops and crappy printers. (Check out the Envy14 and you'l l know why). Next, expanding into more profitable software avenues need not always come at the cost of abandoning the core ideology of a company. To repeat what IBM did nearly 10 years ago today says something about the leadership - copycats who can't be more innovative. I think the recent changes are driven by the CEO - who knows only how to run enterprise software and the article is spot on regarding that aspect.