Hewlett Packard - The Adventure Continues for HP and CEO Meg Whitman

For Hewlett Packard and CEO Meg Whitman, there is never a dull moment.    Board Chairman Ray Lane was essentially given a vote of no confidence by shareholders and has relinquished his chair position.  . John Hammergren, who has been on the board since 2005, and former Wachovia CEO G. Kennedy Thompson, a director since 2006, will resign, as well.  The three could perhaps offer themselves as a package deal for Dancing with the Stars.

All three have   been on the board for much of Hewlett Packard’s precipitous decline in stock price.  There for Autonomy.  There for the  tablet debacle.  You really can’t  really  blame the board for these, in some respects.  External smartest guys in the room and others in the Hewlett Packard organization did make the recommendations. 

After hitting a 52-week low of $11.25, that stock has gone up to $20.66.  This is still substantially below the just under $45 they were trading at a couple of years ago.  On a percentage basis, the Dow has increased about 20% and Dell has decreased about 10% over the same period.

So, what is HP going to do?  Meg Whitman is still saying recovery will be a four-year process.  Hewlett Packard has been investing in security as part of their strategy.  Tablets were revived from coaster status to being part of the strategic mix. Smart phones may be part of the mix in 2014.   Last week, as part of project Moonshot, Hewlett Packard introduced a line-up of super servers.  These are designed to appeal to the biggest social-media, cloud-computing, and e-commerce sites.

Autonomy is going to continue to be part of HP.  Even after the massive writedown.  "We remain committed to Autonomy; we remain committed to the brand, to Cambridge, to the U.K.," she said at a  recent news conference.   "It is an almost magical technology. ... It plays into a big shift in the market, the area of Big Data, which HP should be in."  Bets are being taken as to who will ultimately be thrown under the bus for the analysis of this deal and from which side of the pond.   http://www.denverpost.com/business/ci_22999671/hewlett-packard-ceo-meg-whitman-remains-committed-autonomy

 

The laptop/PC business won’t drive a recovery.  Printer sales and ink revenue won’t increase if laptop/PC sales tank.  According to IDC, laptop/PC sales dropped over 11% in Q1 versus the same period in 2012. For HP, the drop was 24%.  Windows 8 sales have not been astronomical, as well. 

The takeoff in tablets has sucked the growth out of PC and laptop sales.  Tablets will   out-ship desktop PCs this year, according to IDC.  They are also forecasting that by the end of 2013, desktop PC shipments will dip 4.3 percent.  Tablet shipments will rise to 190 million units, an annual growth rate of 48.7 percent, according to the firm.

Whitman was named CEO in September 2011, replacing Leo Apotheker.  “The pressure is on Meg,” stated Toni Sacconaghi, an analyst with Bernstein Research.  A housecleaning of the board “bought her a year.” according to an April article in the New York Times.  More bold moves are needed by Hewlett Packard and Whitman.  Going private (unlike what Dell is trying to do) isn’t an option.

Whitman and Hewlett Packard need to make even more aggressive  moves.   

http://www.datamation.com/mobile-wireless/tablets-to-surpass-desktop-pcs-this-year-idc.html

 

http://www.forbes.com/sites/connieguglielmo/2013/04/04/hewlett-packards-board-continues-to-deliver-drama-as-chairman-lane-steps-down/

“Hewlett Packard and Meg Whitman – The First Year.  Turbulence and Turmoil in the Valley” at

http://kensek.blogspot.com/2012/09/hewlett-packard-and-meg-whitman-first.html

Hewlett Packard to Expand Razor Product Line

Whoops, I meant their printer product line.  This expansion could  generate a fair amount of ink cartridge revenue for Hewlett Packard, as well.  "We haven't had a new product lineup in seven years," said HP CEO Meg Whitman in talking about Hewlett Packard’s plan to announce a new line of printers.  "It was very obvious that we had a product gap here."

Hewlett Packard will be introducing multi-function machines that combine printers with scanners and software to manage electronic documents.  The software will come from their Autonomy group.  The rumored price point, around $2500 to $3000, and targeted at small businesses and groups within larger companies.

In IDC's  “MarketScape: U.S. Shared, Networked Multifunction Peripherals for the Distributed Office 2012 Vendor Analysis” (Doc # 235820).  Companies in the Leaders quadrant include Xerox, Rico, HP, and Canon.  Konica/Minolta are close behind as Major Players.  IDC’s quadrant displays a company’s market share graphed against Capabilities and Strategies.  The Capabilities score measures vendor product, go-to-market and business execution in the short-term.  The Strategy score measures alignment of vendor strategies with customer requirements in a three to five year timeframe. Whitman's announcement will help keep HP in this section of the quadrant.

This announcement may portend good things for Todd Bradley,  head of HP’s printer and personal-computer businesses.  The printing unit has brought in over $25 billion in revenues to HP. Under the Hurd regime, R&D  suffered, dropping from  $3.7 billion to $3 billion between 2003 and 2010.  More will be spent under the Whitman regime.

Whitman also telegraphed some of her other strategies for the next couple of years  while speaking at the Gartner US Symposium/Txpo, held in Orlando.  She stated that HP would probably not release a smartphone until 2014.  She also expects HP to be a major contender in the tablet and mobile PC markets.

“There will be ups and downs in this business," Whitman said.  "PCs may be declining.  Tablets may be growing.  The business definition here is 'personal systems.’  It's not PCs.  It's personal systems.  And we think we can win.”  Whitman didn’t comment on which OS the smartphones will use.

Hewlett Packard’s stock decline has been steeper than the double diamond ski  runs at Squaw Valley in Lake Tahoe, California.  On October 26, the stock hit another 52-week low of $13.94.  This represents a 52-week decline of around 50%.  Competitor Dell has had a slide of almost 45% over the same period and also had another 52-week low of $9.19.

Whitman and Hewlett Packard need to make some bold moves.  She  said when she became CEO   that turning Hewlett Packard around would be a multi-year effort.  She’s now just into her second year at the helm.  There may not be a third if things don’t start improving.

“Hewlett Packard and Meg Whitman – The First Year. Turbulence and Turmoil in the Valley” at

http://kensek.blogspot.com/2012/09/hewlett-packard-and-meg-whitman-first.html

Dell to Acquire SonicWALL

Dell announced today their intention to acquire SonicWALL from equity investor firm Thoma Bravo. Thoma Bravo had take SonicWALL private in 2010. They have also recently had purchased secure web gateway company Blue Coat Systems and taken it private. This acquisition, according to Dell, will enable them to offer customers a broader range of enterprise offerings. SonicWALL revenues for the last 12 months were about $260 million. www.sonicwall.com

“Dell’s distribution, reach, and brand are well-recognized across the industry. This transaction aligns well with Dell’s mid-market design focus and allows us to accelerate growth of our flagship SuperMassive Next-Generation Firewall solutions with Large Enterprise customers,” said Matt Medeiros, president and CEO, SonicWALL. “Additionally, SonicWALL is recognized as a leading security solutions provider for small and medium businesses through our UTM solutions. Dell’s phenomenal breadth and reach into small and midsize companies provides a significant opportunity to expand our customer base.”

Before being taken private by Thoma Bravo, SonicWall’s strengths were in serving the SMB marketplace with advanced network security and data protection solutions. They have expanded their portfolio to include Next-Generation Firewalls (NGFW), providing these in a form factors scalable to the enterprise.

SonicWALL and Palo Alto Networks were the top performers in a recent NSS Labs analysis, the “2012 Next Generation Firewall Security Value Map™” (NGFW). The value map illustrates Block Rate versus Price per Protected Mbps. The SonicWall SuperMassive E10800 and the Palo Alto Networks PA-5020 NGFWs were the “winners”.

http://kensek.blogspot.com/2012/03/sonicwall-palo-alto-networks-top.html

Effect on Product Development for SonicWALL - To the extent Dell leaves the development team intact to do their own thing, disruptions should be minimal.

Effect on the SonicWALL brand - No one has said whether the company name SonicWALL will be going away, yet. . Nothing has been said as to whether Dell will use the McAfee/Intel model of having the company be a wholly owned subsidiary of Dell.

Other products SonicWALL brings to Dell - Besides firewalls, NGFWs, and Unified Threat Management (UTM) solutions, secure remote access, email security, backup and recovery, and policy, and management and reporting. Dell is acquiring a nice set of security solutions.

Effect on the SonicWALL channels - SonicWALL has 15,000 resellers providing global coverage. Dell plans to “take the very best of the SonicWALL channel programs” (sounds like a reduction…..) and combine it with Dell’s PartnerDirect program. Dell’s existing PartnerDirect members will be able to sell SonicWALL solutions.

SonicWALL was a public company until 2010, when Thoma Bravo acquired it for $717 million. Investors and analysts are estimating the purchase price to be between $1 billion and $1.5 billion. Healthy return by Thoma Bravo for a 2-year investment! Dell will be funding the deal with cash.

It would be interesting to hear what they’re saying about this at Palo Alto Networks, Check Point Software Technology, Barracuda Networks, and Juniper Networks. IMHO, the Palo Alto Networks IPO (Initial Public Offering) valuation may drop by a bit.

http://content.dell.com/us/en/corp/d/secure/2012-03-13-dell-sonicwall-acquisition.aspx