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

The first year of Meg Whitman’s tenure at Hewlett Packard has not been fun.  Challenging?  Yes.  The company hit a 52-week low of $16.23,   in late September.  Its 52-week high of $30 was in mid February.  When Whitman took the reins of the company in September of last year, the stock was trading at just under $23.  So investors have seen the value of the stock decline of about 30% during year one.

Whitman gets a C- for year one.  Revenue, earnings, stock price, market share are all down.  Many proper decisions to turn the company around are taking place.  The numbers are not there yet.  Whitman stated when she took over the reins that this would be a multi-year project.

According to SF Gate,  Whitman is betting that refining the company's existing strategy, rather than making radical shifts, will help reverse the company’s troubles. 

Dell has been suffering over the same timeframe.  From September 22 to September 28:

• Nasdaq – up about 28%
• Dow Jones – up about 26%.
• Hewlett Packard - down about 25%
• Dell – down about 29%

With the exception of March and April, Hewlett Packard and Dell have been trending downward at about the same rate. Click on the graphic to enlarge it.

The big day will be October 3, when Whitman discusses her strategy for HP at an analyst conference.

Some Brief Observations

Autonomy - Autonomy has been a disaster for Hewlett Packard over the last year.  Jefferies analyst Peter Misek is advising investors to sell HP's stock, but is warning that HP could be heading for another huge write-off, of around $3 billion.  http://www.businessinsider.com/analyst-says-hp-may-write-off-3-billion-2012-9

The 27k layoffs –   Layoffs, retirement, attrition.  This is good for the company, ultimately. 

Continuing to lose laptop market share to Dell and Lenovo – bad.  Its share of PCs dropped to 14.9 percent in the second quarter, while Lenovo's share has increased to 14.7 percent, according to Gartner.

September introduction of “Stylish and Affordable Consumer and Business PCs”   and hoping to “Help Businesses Maximize Productivity with Powerful New AMD-based PCs” – HP is trying their hardest to reverse the loss of market share.  

Introduction of new entry-level, web-connected Designjet ePrinters - They are betting that some people will always need to be printing.  Betting on the razor blade strategy here. 

HP also had a September introduction of what they are calling the industry’s first web-connected, entry-level printing solutions for architecture, engineering and construction (AEC) students and professionals.  This strategy is to make   in-house, large-format printing accessible to more users.

The trend towards people printing less from their laptops/desktops – bad.  Cartridges are one of Hewlett Packard’s razor blades.

Announced intention to offer a mobile phone – bad.  This is a crowded market.  Hewlett Packard will be a late entrant.  "We have to ultimately offer a smartphone because in many countries of the world that is your first computing device.  You know, there will be countries around the world where people may never own a tablet, or a PC, or a desktop.  They will do everything on the smartphone.  We're a computing company; we have to take advantage of that form factor," Whitman said, according to a transcript. 

http://www.mercurynews.com/business/ci_21543699/hewlett-packard-developing-smartphone-ceo-meg-whitman-says

 

The on again, off again tablet -   Mixed thoughts on this.  An HP tablet may be successful only as a niche product.  They are late.  The market is crowded.  This means downward pressure on prices and margins unless HP comes up with something unique. 

Spinning off Web OS into Gram - If it is going to be successful, this was probably the only way to do it.

Additional security solutions announced in September – Excellent.  HP is betting heavily on security.  In a down market, companies slow their investment in security, they do not slash it. This included new features to HP Assured Identity, Security Operations Consulting services, a new release of ArcSight Enterprise Security Manager.  They also announced   the introduction of the HP TippingPoint NX Platform Next Generation Intrusion Prevention Systems (NGIPS).  I don’t know about that last acronym! Back to the conference room for the naming committee.

New virtualization solutions announced in August at VMWorld – Very good.  They announced that they were expanding their HP Converged Cloud portfolio with new solutions for VMware vCloud® Suite 5.1.  This is a growth sector, regardless of the different definitions people are using for "cloud".

Revenue/earnings - Bad.  Four consecutive bad quarters. Enough press.  Enough said. 

Look for major articles on Hewlett Packard, October 4.  This is the day after the analyst meeting.

http://www.sfgate.com/technology/article/Meg-Whitman-to-sharpen-HP-business-focus-3887883.php

Status and Future of Symantec

It has to be a sad day when you lose your CEO title and the company stock has its biggest gain since July 2001,   17%.  Symantec replaced Enrique Salem with board chair Steve Bennett on Wednesday.  Symantec stock has been dropping steadily from a 52 week high of $19.81 to a recent low of $13.06.  As of 12:50 Eastern Standard on 7/26, $15.40 (post Salem removal).

"While progress has been made over the last three years in many areas, it was the board's judgment that it was in the best interests of Symantec to make a change in the CEO," said Steve Bennett, chairman, president, and CEO.  Bennett had been running the show at Intuit from 2000 to 2007 before joining Symantec several years ago.  You can't call the Salem removal a witch hunt. It was time for a change.

Below are some 2012 Q1 revenue figures for Symantec

•     GAAP Revenue of $1.668 billion
•     Non-GAAP Operating Margin of 26.1%
•     Non-GAAP Earnings per Share of $0.43
•     GAAP Deferred Revenue of $3.745 billion
•     Cash Flow from Operations of $340 million

However, the GAAP revenue was up only 1 percent year-over-year and up 4 percent after adjusting for currency.  Income actually dropped, from $191 million to $172 million

For the earnings press release http://investor.symantec.com/phoenix.zhtml?c=89422&p=irol-irhomeStock

Symantec’s 5-year stock high was in August 2008 at around $22.  Their 5-year low was in October 2008, at around $11.  Note a good year for them.  The fact that the stock is currently $14 demonstrates how stagnant the company has been over the last several years.

 

Symantec’s performance in a  Gartner  Magic Quadrant  is mixed.  They’re not in the Leader’s section of Gartner’s Magic Quadrant for Mobile Data Protection (three competitors are).  They’re a Challenger for Secure Web Gateways (five competitors are in the Leaders portion).  They are the Leader for Data Loss Prevention (with five other companies) and for Endpoint Protection Platforms (with four other companies).  Being in the Leaders portion of a Gartner Magic Quadrant can be screening criteria for companies.  Gartner takes great care in a document explaining how to interpret a  Magic Quadrant. They state  that companies whose products are  in the Challenger, Visionary or Niche sections  of the quadrant may be the best solution for your needs.  Nonetheless, a common sales presentation line is, “And they’re in the Leaders portion of the Gartner Magic Quadrant for ‘fill in the blank’”.

In the OPSWAT June” Industry Market Share Analysis Report”, Symantec is fourth in global  market share, behind Avast, Microsoft,  and ESET. Symantec has 10.3% of the market. They are just ahead of AVG Technologies and Avira.  In North American, Symantec is  second behind Microsoft with 15.1% of the market.  www.opswat.com

Both McAfee (until their acquisition by Intel a couple of years ago) and Symantec have been aggressive in making acquisitions in the last decade.  Possible reasons -  trying to be CA West, expanding product portfolio, plugging gaps in the portfolio,  needing to keep the stock price up, revenue of existing core products stagnant, “buy” decision winning out over “make” decision.  Interestingly enough PGP (a leader in encryption technology), and currently owned by Symantec, was once owned by McAfee.   Buying for the sake of buying doesn't cut it. Enterprise customers and analysts want some visibility into the rationale and roadmap for these.

Depending on the pundit, Symantec should keep leading storage management vendor Veritas.  Alternatively, Symantec should sell Veritas.  If the management team hasn’t figured out how to best integrate   Veritas into the product mix after eight years, spin the company off.  Sell it another company or see if an equity firm like Thoma Bravo is interested.  Thoma Bravo purchased Secure Web Gateway/WAN company Blue Coat Systems and recently sold SonicWall to Dell for about $1.2 billion.   

The management team/existing culture may be one that has lost its mojo.  When their streak of winning VB100 awards was broken a couple of years ago,   the company stopped being tested by Virus Bulletin www.virusbtn.com .  With testing organization AV-comparatives, you can’t choose (cherry pick) which tests to participate in www.av-comparatives.org .  So, Symantec is not one of the twenty two companies included in 2012 AV-Comparatives testing.  This doesn’t benefit Symantec’s customers or their channel partners.  Symantec still participates in AV-test testing and scored 15 out of 18 in March/April certification testing www.av-test.com . 

Several  years ago, a Symantec marketing  employee chided  companies utilizing the freemium model.  He  mustn’t have realized that Symantec owns PC Tools, another freemium company.  Unfortunately, PC Tools received only one star in AV-comparatives’ most recent Retrospective/Proactive Test (July 2012). 

Some Thoughts

• More risk taking.  Reward employees and business units who do that.  Make sure that there are employees who know how to and are comfortable doing this. Bring aboard employees who can do this.
• More  cloud.  Symantec was slow to the game.  Competitor Trend Micro was early. As was Panda. The channel is becoming more comfortable offering cloud and SaaS based solutions. 
• Further embrace   VM technology.  The fact that Symantec will be at VMWorld in San Francisco in August and in Barcelona in October are good things. Symantec currently offers  a number of VM solutions. 
• Embrace BYOD - Bring Your Own Device is the acronym du jour.  While Symantec offers mobile and tablet security solutions under both the Norton and Symantec brands, they need to be more visible in promoting these.  BTW – “Protect your stuff” is an interesting tag line in the Norton line but…
• Pretend you're not one of the 800 pound gorillas. For years, Silicon Valley commuters driving north on 101, would see a Symantec sign as they drove through Santa Clara. If they raised their eyes a little. They'd see that this was virtually next door to McAfee headquarters.  A nice friendly competitive poke. 

A strategy of placing a huge number of yellow boxes in brick office supply stores no longer suffices.  Both Symantec and McAfee   have come to this conclusion in the last couple of years.  Instead of huge, the number is still  “a lot”.  Webroot was using this strategy for a while at Best Buy when they were the “recommended choice” of the Geek Squad (unless you asked them off the record!). Their box count is down dramatically.

 

From a July 25 article in CRN, "The security space is evolving so rapidly that companies that stick with old ways of doing business are going to lose their relevance," said one East Coast channel partner on condition of anonymity. "Symantec has been skating on its reputation for a long time, and that has cost them big time. Maybe this change will help them get their house in order."

From an irreverent perspective, it may be time for Symantec to  tone down the yellow color.  “Men usually perceive yellow as a very lighthearted, 'childish' color, so it is not recommended to use yellow when selling prestigious, expensive products to men – nobody will buy a yellow business suit or a yellow Mercedes.” http://www.color-wheel-pro.com/color-meaning.html

 

http://www.bloomberg.com/news/2012-07-25/symantec-board-replaces-ceo-enrique-salem-with-chairman-bennett.html

Secure Web Gateway Market Heating Up – Websense Version 7.7

The Secure Web Gateway market is livening up.  On Monday, San Diego based Websense announced Version 7.7 of Websense Triton and their Websense   Secure Web Gateway.  They state that their Websense Triton solution is the first to provide data-aware defenses necessary to prevent the advanced attacks that lead to data theft.

Websense also announced that the 7.7 release contains 10 new advanced malware and data theft advances, including spear phishing protection with cloud sandboxing, and a new forensic reporting dashboard with in-depth security intelligence.

These new defenses also  include    detecting criminal encrypted uploads; advanced malware payloads and command-and-control recognition; optical character recognition (OCR) of text within images for data-in-motion; drip (stateful) DLP detection; password file theft detection; and geolocation awareness.  These are powered by   Websense’s real-time inline ACE (Advanced Classification Engine) security engine and Websense’s imbedded Data Loss Prevention (DLP) engine.

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Spear phishing protection with cloud sandboxing is part of the arsenal.  Websense's   cloud sandboxing capability identifies suspicious links in emails for real time analysis.  When email recipients click on an embedded URL, Websense analyzes the website content and browser code in real time, in a cloud environment, to ensure safety in any location at any time.

The Websense TRITON Advanced Malware Threat dashboard   profiles security incidents, provides in-depth forensics, and data theft capture.  With severity levels and the ability to export incidents to SIEM solutions, Websense users know who was attacked, how the attacks function, where those communications were being sent, and what data was targeted.

Blue Coat Systems is promoting that their   Unified Web Security Solution, combining cloud services and on-premise appliances delivers the “No Boundaries, Always On protection”.  The cornerstone of their protection, their Secure Web Gateway appliance(s) (ProxySG) and their real-time WebPulse technology, a defense that utilizes   the information provided by 75 million users. 

Historically, Blue Coat has been an appliance-focused company.  They are now more heavily promoting their hybrid and cloud technology, due in large part to San Jose, CA based Zscaler.  Blue Coat  introduced their Unified Web Security Solution in March and are now more heavily promoting their cloud service, along with a 30-day trial.

According to the Gartner “Market Share: Security Software, Worldwide, 2011 Report (March 29, 2012), Inc., Blue Coat is the leader with 17 percent of the $1.95 billion Secure Web Gateway market.  This combines both appliances and software solutions.  In the appliance segment of the market, Blue Coat has about  44 percent of the market, leading its closest competitor by more than 30 percentage points.

Zscaler is the cloud-based canon in the mix.  Actually, they use a jet in their imagery.  Zscaler offers a pure cloud based solution.   They dislike hardware and consider Capex (Capital expenditure) to be a four letter word. They’re   the newcomer to the Leader’s portion of the Gartner Magic Quadrant for Secure Web Gateways.  Gartner considers them the Leader with respect to Completeness of Vision.  Cisco is given credit for having the best Ability to Execute, with Blue Coat and Websense sandwiched between the two.  Mc.Afee is  off to the left in the Leader portion of the Magic Quadrant.

The Zscaler  message – “Attention  all Blue Coat Customers, if you’re  the victim of underperforming proxies lacking sufficient security or if you have lost budget support  due to the high cost of multiple appliances, call the Zscaler Security Help Line.”  They offer five flavors of cloud based web security suites http://www.zscaler.com/products_web_security.html  Add on’s include email protection, mobile protection, and Data Loss Prevention (DLP).

One of their promotions has been to offer their solution free for six months to prospects.  The focus being on Blue Coat customers.

So where will this play out?  Blue Coat is 20% leaner and meaner, following their purchase by equity investment firm Thoma Bravo.  They have a hybrid solution.  They have a cloud solution.  They haven’t done a great job of promoting these.  They have a leading WAN solution but that merits a separate discussion. 

It should be an interesting summer for these companies.

Websense has upgraded their product line.  Their solutions have been available as appliances, SaaS, software,  and a Hybrid.  Like Zscaler, they offer email security, as well.  This is a hole in the Blue Coat product line.

Zscaler has their sight on Blue Coat, almost exclusively. They want share. They have a reputation for playing a bit loose regarding number of data centers around the world. But,  hey! It's marketing.   Blue Coat and Websense go after each other.  McAfee and Cisco, the other two companies in the Leaders portion of the quadrant, are relatively quiet in comparison.  Not quite in the shadows – Barracuda Networks, whose strategy tends to be to deliver the low cost solution. Also, Palo Alto Networks. Palo Alto Networks’  Next Generation Firewall provides filtering and like Websense,   automated sandbox analysis of suspicious files.  They also provide limited DLP protection, as well. They are now starting to move forward on the plans to go public.

   

Application control is a topic for another blog. 

Interop Las Vegas 2011 - II

Attendees and vendors have started to flow in to Las Vegas for Interop Las Vegas 2011. Should have placed “something” on the Mavericks. Monday is the big set-up day for exhibitors. The exhibition part of Interop is Tuesday through part of Thursday with Thursday afternoon being when the “trading of the tchtotchkes” among vendors will occur. For those who haven’t tired of that yet.

In perusing titles of presentations to see what the key topics will be, “cloud” does appear to be one of them. Of course, having its own track does give cloud an advantage. http://www.interop.com/lasvegas/conference/cloud-computing.php .

The first keynote at Interop Las Vegas on Tuesday also points in the direct of cloud, cloud computing, and cloud security being hot topics. “Change the Rules of Networking to Enable the Cloud” is the topic by Hewlett Packard’s Dave Donatelli. Microsoft’s Zane Adams will be speaking on “Public Cloud: The Transformational Opportunities Ahead" on Tuesday. http://www.interop.com/lasvegas/conference/keynote-speakers.php .

Correction to previous blog. Symantec does not have a formal booth presence at Interop Las Vegas. Under Huawei Symantec, yes. http://www.huaweisymantec.com/en/ . Comodo, voted the top free Internet Security Suites in a decidedly unscientific poll by download.com will be present in booth 757. That’s 2/3 of a very popular number in Las Vegas. http://kensek.blogspot.com/2011/03/comodo-internet-security-suite-tops.htm . The Czech Trade Promotion Agency has a booth presence at Interop Las Vegas to promote international trade and cooperation between Czech and foreign companies. Booth 1965-D.

No IPO (initial public offering) sharks seen today. The only visible sharks were the ones in the Mandalay Bay Shark Exhibit. The first Interop Las Vegas package arrived under the door Sunday evening. There will be more.