September 24, 2011

End of The Soap Opera ?





"Having thrown Leo Apotheker under the bus, Hewlett-Packard's board of directors clicked the "buy it now" button last week and tapped current director and former eBay chief Meg Whitman as CEO...." barrons.com

How long can Meg last ?

• John Young : 14 years (1978-1992)

• Lew Platt : 7 years (1992-1999)

• Carly Fiorina : 6 years (1999-2005)
• Mark Hurd : 5 years (2005-2010)
• Leo Apotheker : 1 year (2010-2011)

Mark Hurd sex harassment letter published !

September 14, 2011

HP has abandoned plans to offshore 200 jobs in UK (+ 64 in France)

http://www.theregister.co.uk/

HP has abandoned plans to offshore the jobs of IT support staff working on the Adams 2 contract for the Department of Work and Pensions.

The saga began in June when HP first revealed it was in talks to transfer some 200 roles based in north-east England to India to help it match the Government's demand to cut costs.

The move was met with obvious resistance from HP employees, the Public and Commercial Services Union and latterly local MPs, who highlighted the security implications of overseas workers managing a live database on 25 million citizens.

"Having discussed the proposal with our government client, we have agreed that in this instance we will continue to carry out the work in the UK," said an HP spokesman in a statement sent to The Reg.

Due to the sensitive nature of the work carried out by HP employees at the DWP, the Government had the final say on transfer of roles but the PCS also put pressure on proceedings by balloting staff on their appetite to strike.

Slightly less than half of unionised members turned out but 90 per cent of those voted for industrial action short of a strike, including working to rule and disrupting the knowledge transfer process.

Commenting on the latest development, PCS general secretary Mark Serwotka said: "This is very good news for our members who have campaigned hard on this and been rewarded with saving their jobs.

"But it also means that the very real concerns we raised about data security have been listened to, and we are pleased that ministers have seen sense."

Employment minister Chris Grayling said he had asked contractors to "find a way to work in the UK".

"We have always been clear that we will not offshore any DWP jobs, and we are exploring how future offshoring can be minimised," he said.

And also 64 jobs saved in France : http://cftchp.blogspot.com/2011/09/2-delocalisations-annulees.html

March 28, 2011

HP Shareholders Vote Against Executive Compensation Packages

HP investors, gathered at an annual meeting, voted against proposed compensation packages for top executives, signaling that shareholders want more influence over how managers are rewarded.


http://www.bloomberg.com/news/2011-03-23/hewlett-packard-shareholders-vote-against-executive-pay-1-.html?cmpid=yhoo
 

February 12, 2011

What HP is all about in 30 seconds

The Economic Times quotes HP’s Léo Apotheker on his plans for HP’s future. Apotheker touted the experience of the company’s new board members, the company’s moves to strengthen “certain parts” of its technology portfolio, and the company’s framework uniting its diverse areas. Apotheker also said, “The first thing I want in 4-5 years is for people to be able to articulate what HP is all about in 30 seconds

http://economictimes.indiatimes.com/features/corporate-dossier/hps-ceo-leo-apotheker-on-how-he-plans-to-make-the-worlds-largest-it-co-dance/articleshow/7468476.cms

February 03, 2011

Can HP become a cool company ?

BBC News with Leo Apotheker at Davos.
You should read this : http://www.bbc.co.uk/news/business-12291529

"I hope one day people will say 'this is as cool as HP', not 'as cool as Apple'"

December 29, 2010

Ex-HP CEO Mark Hurd Fights To Keep Letter Confidential

(Reuters) - Hewlett-Packard Co's former chief executive, Mark Hurd, asked to intervene in a Delaware shareholder lawsuit as he tries to keep private a letter tied to his abrupt departure.

In court documents filed on Tuesday, Hurd asked to become a party to a lawsuit brought by a shareholder against Hewlett-Packard for the narrow purpose of keeping under wraps a letter sent to him. Both the shareholder and the company have said they do not believe the letter should be considered confidential.

Hurd, who has since joined Oracle as president, resigned suddenly from Hewlett-Packard in August, stunning investors and sparking an investigation by regulators. The letter at the center of the Delaware Chancery Court fight was sent by attorney Gloria Allred on behalf of Jodie Fisher, a contractor for Hewlett Packard. Allred was attempting to mediate a dispute between Hurd and Fisher, who has said the letter in dispute contained "many inaccuracies," according to court documents. Fisher sparked an investigation that eventually led to Hurd's departure.

The shareholder lawsuit was brought by Ernesto Espinoza, who sued the company to inspect its books.

December 21, 2010

SEC opens inquiry on Hurd resignation

Federal regulators have opened a broad inquiry into the circumstances surrounding Mark Hurd’s resignation from HP, investigating Hurd’s use of corporate expenses as well as a claim that Hurd had provided event contractor Jodie Fisher with inside information.

As part of the probe, the Securities and Exchange Commission is checking whether Mr. Hurd passed information about H-P's $13.9 billion acquisition of technology-consulting company Electronic Data Systems Corp. to a former H-P event hostess in 2008, before the deal was announced.

December 05, 2010

Leo Apotheker's Top 11 Priorities For The New Year

ChannelWeb, December 01, 2010

New HP CEO Leo Apotheker, who took the helm on November 1, is already signaling his top priorities for 2011. Among the areas that the 20-year-software-veteran has singled out are increasing software sales and doing a better job bringing consumer technology breakthroughs to businesses. Here are Apotheker's top 11 priorities for 2011 gleaned from his early conversations with Wall Street analysts and reporters.

1/ Increase software sales

Increasing HP's software sales has been a major theme for Apotheker. The former CEO of ERP software giant SAP has pointed out several times that software makes up a meager three percent of HP's $126 billion in annual sales.

"We need more software both as a category and also across the portfolio so that we can differentiate our individual products and services," said Apotheker. So just what kind of software sales gains is he looking for? "Doubling it wouldn't be too bad," said Apotheker. "Tripling it would be even better!

2/ Foster more HP innovation with increased R&D spending

Make no mistake about it. Apotheker is a technologist. And he is determined that HP leverage its huge scale to deliver more technology breakthroughs to the marketplace. Apotheker calls it accelerating HP's innovation cycle. HP's R&D budget was up more than sales growth year-over-year in 2010. Expect that trend to continue. And look for Apotheker to push the R&D team hard to deliver advances that provide near term product advances for HP.

3/ Upping HP's services quotient across the company

Apotheker wants to plug more of HP's services offerings into more deals. He sees services, like software, as a missed opportunity for the computer giant. This follows two years after HP acquired EDS for $13.9 billion. HP Services revenue was essentially flat at $34.93 billion in fiscal year 2010 compared with $34.69 billion for 2009. Apotheker says that HP needs to break down some technology silohs it has between the product groups and the services team and add "services that cut across all the segments."

4/ Beefing up HP's direct sales force

Apotheker headed up a large direct sales force at SAP. And he has already signaled his intent to grow HP's direct sales force. "We feel that adding all these people we can provide our customers way better service so we'll continue doing that," he said. Look for HP to add more direct sales talent to its services team. Apotheker also aims to step up the training and solutions focus of the direct sales force. "Trust me, we'll be focusing on that even more in the future," he said.

5/ Improve HP employee morale

Apotheker has moved quickly to get HP employee support for the next big cultural shift at the company. Cost cutting and salary cuts were the order of the day under former HP CEO Mark Hurd. Only three weeks on the job, Apotheker reinstituted salary increases in Fiscal Year 2011 as part of the HP's normal annual review process.

"HP employees are a highly competitive group who want to win," he said. "They also want to be rewarded for their performance." You can almost hear HP employees cheering Apotheker.

6/ Provide customers choice, not proprietary technology lock-in

HP may have the broadest and deepest product line in the information technology marktetplace. But don't look for the company to attempt to lock customers into a single end-to-end vertical technology stack. Apotheker says customers are looking for choice not proprietary technology lock-ins. HP has made sure its open industry standard servers run the full range of software solutions from the likes of Oracle, SAP, and Microsoft. Expect that to continue under Apotheker.

7/ Double-down on HP's networking business

It's no mistake that Apotheker has singled out the impressive sales growth gains in HP's ProCurve networking business. He sees the networking business as a huge opportunity for HP to play a greater role providing converged infrastructure with HP servers, storage and networking. HP said networking sales increased a whopping 227 percent overall in the fourth fiscal quarter 2010. HP has enrolled 400 of its top global accounts in the HP Networking proof-of-concept program. Look for Apotheker to lead the charge to increase the company's networking sales by an even greater margin in 2011.

8/ Make it easier for customers to do business with HP

Apotheker has met with countless HP customers who want to do more business with the computer giant but in some cases are put off by the difficulty of doing business with the $126 billion behemoth. "We need to make it easier for customers to do business with HP," he says. Look for Apotheker to take a number of steps to reduce the bureaucracy and the finger-pointing that has frustrated more than a few customers looking for help from HP.

9/ Faster sales growth in emerging markets

A self-described Global citizen, Apotheker has already traveled thousands of miles and met with customers and employees around the world. Look for him to spend a lot of time in emerging markets like India and China making sure that HP is firing on all cylinders leveraging its size to gain competitive advantage. Apotheker sees HP as a global citizen too that needs to do a better job outpacing the competition in those emerging markets.

10/ Offer customers more cloud and web mobility choices

Apotheker says customers are looking for information on demand anytime and anyplace—what he refers to as a "mobile instant on platform." Customers don't want to have to struggle to get information from the corporate network when they are on the road. And they don't want to be locked into a single public cloud. They want the cloud their way. And Apotheker aims to make sure they get it in whatever form they want it. "We will continue to deliver solutions in a hybrid environment whether it's on-premise through the cloud or hosted," he said.

11/ Leveraging consumer technology advances in the enterprise

Apotheker likes to point out that HP has a strong footprint in the both the consumer technology market and the enterprise computing business. In fact, he calls that consumer to enterprise connection HP's secret sauce. Look for Apotheker to push more consumer technology advances into the enterprise to give HP a competitive advantage. And look for him to do a much better job integrating consumer technology like the tablet into full fledged vertical market enterprise solutions.

November 06, 2010

The real story : why Hurd Lost Out as Board Lost Faith

The Wall Street Journal

Best parts :

- "Dear Mr. Hurd," began the note that Mark Hurd read on June 29 in his office at Hewlett-Packard Co. "Please be advised that we represent Ms. Jodie Fisher regarding her claims... against Hewlett-Packard ('HP') and you, Mr. Mark Hurd, as an individual."


- An investigation by The Wall Street Journal into Mr. Hurd's sudden ouster reveals that the letter contained an explosive allegation: that in early 2008, Mr. Hurd told Ms. Fisher of a still-secret H-P plan to buy Electronic Data Systems Corp.

- In one previously undisclosed example: The CEO had told directors he didn't know Ms. Fisher acted in adult movies, say people briefed on the matter, but investigators hired by H-P learned he had visited Web pages showing her in pornographic scenes, including a site called "erotic4u.com."

- Another: Mr. Hurd told the board he didn't know Ms. Fisher well; later, in talking to investigators hired by H-P, he said they had a "very close personal relationship."

- The letter that set off the furor was sent on Ms. Fisher's behalf by celebrity lawyer Gloria Allred. It included an eight-page chronology of meetings in hotels around the world. At some, say people who have seen the letter, it alleged that Mr. Hurd sexually harassed Ms. Fisher, in certain cases touching her body in sexually suggestive ways.

- The letter also said Mr. Hurd and Ms. Fisher discussed intimate details of the CEO's life, including his personal life at home. And it alleged that Mr. Hurd told Ms. Fisher of H-P's plan to buy EDS at a Madrid meeting that began near the end of March 2008. H-P had just made a confidential offer to buy EDS; it wasn't until May that H-P unveiled the $13.9 billion deal.

- The board at first stood behind Mr. Hurd, accepting his assertion that Ms. Fisher's claims were baseless. When doubts developed, the board was split. Two directors argued almost to the end against ousting Mr. Hurd, say people familiar with the board.

- After Mr. Hurd got the letter from her lawyer, he and Ms. McIlvaine emailed it to H-P General Counsel Michael Holston, who forwarded it to directors. Several, said someone familiar with the board, then searched "Jodie Fisher" and learned of her adult-movie past.

On a conference call over the July 4 weekend, say people familiar with the call, directors who'd spoken to Mr. Hurd said he told them that he had dined with Ms. Fisher a few times but didn't know her well, and that all of her claims were false, including that he sexually harassed her and told her about the pending EDS deal. He also told board members that he never had sex with Ms. Fisher, said people familiar with the conversations.  Directors were inclined to believe him. "Mark had unanimous support going into this," one person familiar with the board says. "The board was keenly interested in keeping him as CEO."

- Still, directors were concerned that Ms. Fisher's lawyer was Ms. Allred, who had built her practice representing women claiming to have been wronged by powerful men. The letter closed with an offer to settle, say people who've seen it.

- Some directors were haunted by H-P's 2006 "pretexting" scandal, in which investigators had snooped on phone records of reporters and others. One director resigned in anger over the spying, which the board didn't disclose. It faced a publicity debacle when details leaked, and the Securities and Exchange Commission chided its lack of disclosure. Ms. Fisher's claims, some now worried, might elicit similar criticism if they became known and hadn't been disclosed.

The board hired Washington law firm Covington & Burling for an internal investigation of the allegations. On the evening of July 28, directors gathered without Mr. Hurd at H-P headquarters in Palo Alto, Calif. They filled plates from a buffet and sat around a long table as they prepared to study the results of the law firm's probe. A Covington lawyer, Tom Williamson, described the result of a review of Mr. Hurd's phone calls, travel, expenses and PC usage, and interviews with Mr. Hurd, Ms. McIlvaine and other H-P employees. The picture that emerged was often at odds with Mr. Hurd's initial claims, according to documents reviewed by the Journal and to people familiar with the probe and the board.

Mr. Hurd and Ms. McIlvaine told Covington they first spoke to Ms. Fisher about a job at the Fairmont Miramar Hotel & Bungalows in Santa Monica, Calif. Mr. Hurd interviewed her a second time in Denver, where the two had a three-hour dinner, and stayed at the same hotel. After her hiring, Ms. Fisher met Mr. Hurd in Atlanta, St. Louis, San Diego, Madrid, Los Angeles, Laguna Beach, Calif., Chicago, Beverly Hills
Mr. Hurd held executive events in many of those cities, it found, but at least twice the two met at places where no events were held. For instance, on Feb. 11, 2008, H-P sent Ms. Fisher to the Rancho Bernardo Inn near San Diego, where she dined with Mr. Hurd and spent a night. There was no H-P event at the hotel, the probe found.

Their last meeting was in Idaho. On Sept. 23, 2009, Ms. McIlvaine arranged by email for Ms. Fisher to travel to the Grove Hotel in Boise on Monday, Oct. 5. She arrived on a 6 p.m. flight. Covington said Mr. Hurd told its investigators that evening the two watched the Minnesota Vikings play the Green Bay Packers on TV, first in the hotel bar and later together in his hotel room.

The law firm's review found expense-account irregularities. Mr. Hurd's report for a $219.54 dinner at the Beverly Hills Ruth's Chris Steakhouse on June, 26, 2008, listed his guest as his security guard, Denis Lynch. The probe unearthed emails showing Ms. McIlvaine had actually planned the Ruth's Chris dinner for Ms. Fisher and Mr. Hurd. In an email to Ms. Fisher the next day, Ms. McIlvaine said she hoped the dinner had worked out.

The investigators told of a half-dozen dinners with notations saying Mr. Hurd had dined with Mr. Lynch, on occasions when Mr. Lynch said he wasn't present and when Mr. Hurd actually dined with Ms. Fisher. Mr. Hurd told the investigators mistakes on his expense reports weren't surprising because he didn't fill them out himself; he said Ms. McIlvaine would list Mr. Lynch as a dining companion because the two often ate together when they traveled.

Mr. Hurd told Covington on July 20 that he liked to relax with Ms. Fisher after H-P events and had discussed with her certain deeply personal details, including his life with his wife. He said he and Ms. Fisher had developed a "very close personal relationship" and he considered her "a positive uplifting person who left me feeling good at the end of the day.'

Contradicting directors' understanding that Mr. Hurd claimed to be unaware of Ms. Fisher's adult-film career, computer forensics showed that on April 27, 2009, he Googled "Jodie Fisher video" and then accessed "erotic4u.com" to view more than 30 Web pages, including ones showing scenes of Ms. Fisher in the 1997 adult film "Passion and Romance: Ocean of Dreams." He accessed scenes from the same film 14 days later, the probe found.

Covington, which wasn't able to interview either Ms. Allred or Ms. Fisher, found no evidence Mr. Hurd had sexually harassed Ms. Fisher. But its review left the board with evidence Mr. Hurd had underplayed his relationship with Ms. Fisher, and perhaps prevaricated about it.

The board took a quick poll on whether to disclose Ms. Fisher's allegations. Six favored disclosing and four were against it, according to a person familiar with the meeting. Three of those against—venture capitalist Marc Andreessen, former International Business Machines Corp. executive John Joyce, and legal entrepreneur Joel Hyatt—said that without evidence backing the allegations it was unclear what there was to disclose.

Director Lucille Salhany disagreed. She and several other directors cited the circumstances of Ms. Fisher's hiring—the CEO twice personally interviewing a person with no relevant experience for a minor position.

"The story has morphed already. He lied to my face and he's lying to you," Ms. Salhany told the other directors, according to people familiar with the meeting. "There's no grounds for trusting him."

The meeting ended at 2 a.m., July 29. By then, the board was heavily leaning toward a disclosure of the allegations, and most members agreed with Ms. Salhany that trust had been broken. They were unsure whether Mr. Hurd could continue to lead the company. Messrs. Hyatt and Joyce still hoped to avoid losing the CEO and disrupting H-P.

A few hours later, at 7:30 a.m., directors gathered for the second half of their regular board meeting.

After routine business, executives and others departed about 10:30, leaving the directors in executive session. For a moment, no one spoke. Then Mr. Hurd told the others to continue their discussion about him, and walked out. As they deliberated, Mr. Andreessen and Robert Ryan, the lead independent director, walked to Mr. Hurd's office to tell him the board planned to disclose Ms. Fisher's allegations and portions of the investigation, say people familiar with the proceedings.

"I am against disclosure of any kind," Mr. Hurd responded, these people say. The investigation hadn't confirmed sexual harassment, so there was no need to make the allegations public, he told them.

In the boardroom, the discussion focused on whether to keep Mr. Hurd as CEO. A sheet of paper was labeled with "Staying" on one part and "Departing" on another, and listed different disclosures the board might make, say people familiar with the meeting. The liaisons presented it to Mr. Hurd. "You've put me under siege," he told them.

When the board broke for the day, Mr. Hurd still had the support of Messrs. Hyatt and Joyce. Directors hoped the allegations wouldn't leak while they waited for a mediation session they had scheduled for a week later with Ms. Fisher's lawyer, where they hoped to dig into the alleged EDS leak and other claims.

That evening, Mr. Andreessen drove to Mr. Hurd's house to deliver an update, he later told the board. He told Mr. Hurd the board had decided to disclose some of Ms. Fisher's claims, and the remaining debate was over how to do so and whether Mr. Hurd could stay on, said someone familiar with what he told the board.

According to this person, Mr. Andreessen, referring to the hiring of a porn actress, told the CEO: "You have created a situation ideally suited for TMZ," the gossip website and TV program.

Mr. Hurd said he could reach a private settlement with Ms. Fisher that would lower the chance of Ms. Fisher's allegations ever becoming public. He offered a proposal: Let him resign in three to six months, after he helped find a replacement. It would be a graceful departure that to the outside would look like a retirement, said the person familiar with what Mr. Andreessen told the board.

Mr. Hurd and his lawyer spent the weekend calling directors, pleading for a meeting with the board, where he hoped to salvage his job or at least orchestrate a gradual transition, according to a conversation he had with acquaintances. But on Tuesday, Aug. 3, H-P director Larry Babbio told the CEO the board wanted to begin the process of letting him go.

The next day, Mr. Hurd's lawyers were in San Francisco working out the details of a settlement with Ms. Fisher's attorneys. The sides signed a pact around 2 a.m., say people familiar with the proceedings.

It included a confidentiality agreement designed to eliminate the risk of leaks from Ms. Fisher or her lawyers. Ms. Fisher wrote a brief letter absolving H-P of responsibility and declaring that there were "many inaccuracies" in the earlier letter, without specifying what they were. The brief letter said, "I do not believe that any of your behavior was detrimental to HP or in any way injured the company or its reputation." Mr. Hurd has said he made a financial settlement with her that was "de minimis."

H-P's legal team learned of the settlement at 7:30 a.m. Aug. 5, when a lawyer for the company was told the mediation was canceled because the case had been settled, said someone familiar with the matter.

Some directors felt blindsided. They had wanted to hear from Ms. Allred before a final vote on Mr. Hurd's fate and were counting on the mediation to evaluate the claim Mr. Hurd had leaked the EDS deal. A spokesman for Mr. Hurd said his lawyer told H-P it could talk to Ms. Fisher without violating the terms of the settlement.

Most board doubts about ousting Mr. Hurd disappeared. By the morning of Aug. 6, he had agreed to resign. The holdouts, Messrs. Joyce and Hyatt, agreed to make the vote unanimous.

The announcement came minutes after the stock market closed on Friday, Aug. 6: "HP CEO Mark Hurd Resigns."

Mr. Hurd is now co-president at Oracle Corp. The question of what, if anything, he told Ms. Fisher about the EDS deal in 2008 remains unresolved.

October 12, 2010

HP prepares to scrap a further 1,300 UK jobs

The Independent + Telegraph Oct 12th

HP is preparing to slash a further 1,300 British jobs and move production overseas – a decision that led one trade union to describe the company as a "butcher".

The US technology giant has announced more than 2,000 UK job losses since June. Peter Skyte, the national officer for the Unite union, said: "Despite significant profits, HP appears hell-bent on continuing to butcher its highly skilled UK workforce ... Morale is at an all-time low."

HP said the cutbacks were part of a $1bn (£629m) restructuring of its services business, confirmed in June. As part of the overhaul, it plans to axe 9,000 staff from its global workforce, while filling 6,000 new posts.

Nearly 4,000 jobs have now been shed at HP in the UK over the past two years, with the figure now set to rise to nearly 6,000 by next April, Unite said.

Peter Skyte, Unite national officer, said staff morale had hit rock bottom following "quarter after quarter" of redundancy rounds. "It is becoming impossible for the workforce to work while they have an axe continuously over their heads," he said. "Morale has slumped and it is affecting productivity."

He added: "Lax employment protection in the UK compared to other European countries means that the UK is bearing the brunt of the cuts, as it's quicker and cheaper to sack UK people and export their jobs abroad."

The world's leading personal computer manufacturer announced in June plans to cut a further 9,000 jobs worldwide as it made a $1bn (£680m) investment in fully automated data centres, although the full impact on UK jobs was not known until Monday.

Mr Skyte said: "It's not exactly a recipe for efficiency and productivity. It's been nearly five months between the worldwide announcement and the [latest] UK one."

Unite refused to rule out strikes over the latest job cuts. HP staff who are members of the PCS union and working on government contracts walked out on a two-day strike in March this year in a row over job security and pay. Mr Skyte said: "All action will be considered including industrial action."

Alex Lock, an employment partner at Beachcroft law firm, said HP was acting within the law when it came to moving the jobs offshore. "Lots of companies are basically shipping off some parts of their basic workforce functions to countries like India and Africa."
He added the trend had "accelerated" during the recession as businesses were under pressure to cut costs. "You can get people there [overseas] to do essentially the same tasks, or provide the same technical facilities, but pay them a 10th of what you'd pay them over here."

Last year HP cut more than 700 jobs in the UK as part of a worldwide reduction of 5,700 workers. The job losses were on top of the company's previous plan to reduce its global headcount by 24,600 and shrink its wage bill by 5pc.

In a statement about the latest job cuts, the company said: "HP is in consultation with the appropriate representative bodies within the UK regarding potential workforce changes which were announced June 1st, 2010. This is an initiative to transform HP's enterprise services business to benefit clients through new offerings and improved service delivery."

October 01, 2010

September 30, 2010

Todd Bradley could be next but...


Sources at FUMH indicates that Todd Bradley has already hired lawyers to start working on his compensation package. And guess what ? Trying to humanize his compensation, and tying it to the compensation of average folks at HP is what they’re working on.

The other big move would be to separate strategy from execution. Hurd was both CEO and Chairman of the board. Someone with more “vision,” would be put into that spot and Vyomesh Joshi could become the Chairman, with responsibility for the strategy of the company.

Bradley would like to offer a block of stock options to all employees. At around $40, the “Bradley Options,” could be a way to boost the anemic Hurd-level moral, and try to reward everyone for their sacrifices in keeping HP strong throughout the recession.

Todd Bradley HP official bio
Smartest Executive: Todd Bradley
Todd Bradley talks to CNBC (video)

Yes but....

Leading internal candidates include Todd Bradley, who leads HP's high-volume but low-margin PC division. He is viewed as a strong operational manager, but some board members are worried about his strategic vision, one source said.The source added that others were concerned because Hurd had been seen as major supporter of Bradley's, one of Hurd's first hires when he came onboard in 2005."

http://sg.finance.yahoo.com/news/HP-sought-two-IBM-execs-CEO-rsg-4175365170.html?x=0&.v=2

September 28, 2010

HP subsidiary on strike in Dublin

Irish Times, 09/28

Workers at a HP subsidiary have begun the first of two 24-hour stoppages at the firm's plant in Co Dublin in a row over job security, redundancy terms and pay and conditions.

Engineers and technicians employed by HP Customer Delivery Systems say management at the company have refused to engage with the union representing them.

The 40 IBOA members at the Leixlip plant have been joined by other workers on the picket.

The workers provide maintenance services for a range of electronic equipment including bank ATM machines and point-of-sale devices in shops. They also maintain computer systems in a number of Government departments including the processing of social welfare cheques.

Irish Bank Officials' Association said management at the company signalled its intention to renege on an existing collective agreement and rejected a recent Labour Court recommendation urging HP CDS to engage in dialogue with the union.

The union was to stage a work stoppage at the beginning of August but when management signalled its intent to engage with them it was postponed. However in the following weeks these attempts "fell flat" as the talks were to be confined to a small group of workers a spokesman for the union said.

Staff have raised concerns over job security, redundancy terms, pay, possible transfer and redeployment, as well as the general management culture and issues relating to dignity and respect at work.

IBOA general secretary Larry Broderick said management has adopted a "wholly negative posture" to the situation. "IBOA has repeatedly indicated its willingness to negotiate but management has refused to enter into meaningful talks by rejecting the best efforts of the Labour Court and seeking to rescind previous agreements with the union.

"The stance taken by management in HP CDS is all the more surprising because IBOA has developed a constructive relationship with the management of the parent company, HP, on behalf of our members directly employed there," he added.

A second work stoppage will take place on Thursday unless meaningful negotiations begin in the meantime, the union added.

September 13, 2010

H.P.’s Blundering Board













Best of article :

The Hewlett-Packard board is back to doing what it does best: shooting itself in the foot. By filing an embarrassing lawsuit against the company’s former chief executive, Mark V. Hurd, this week — a suit that unwittingly highlights the mistakes it made in the way it let Mr. Hurd go — the H.P. board can now lay claim, officially, to the title of the Most Inept Board in America. 
 ...

Mr. Hurd got his $12.2 million 30 days after leaving H.P. On Sept. 6 — which is to say, the 31st day — Oracle announced that Mr. Hurd was joining Oracle as co-president, reporting to its founder and chief executive, Lawrence J. Ellison, well known in Silicon Valley as a corporate mischief-maker.
...

Let us acknowledge, before going any further, that Mr. Hurd does not appear to be a candidate for sainthood in this matter. This whole dustup began when Mr. Hurd was accused of sexual harassment by Jodie Fisher, the greeter in question. Although Mr. Hurd quickly paid to make the accusation go away — and although the two have denied having sex — it sure looks like something fishy was going on. You don’t keep someone off your expense account without a reason.
....

Thus, the central contention in the H.P. lawsuit — that Mr. Hurd will inevitably use his inside knowledge of H.P.’s hardware business to help his new employer — strikes me as quite plausible. How can he not? He’s spent the last five years eating, drinking and sleeping H.P. (Well, except when he was eating and drinking with Ms. Fisher.) H.P. is in his bones.
...

What I’ve been hearing this week is that the board felt it had no choice but to sue Mr. Hurd — both to put him on notice and to send a strong message to the rest of the company. But if this case gets laughed out of court, as I suspect it will, the message is going to be a bit different from what the board intends. The whole world will know Mr. Hurd walked away with $40 million of H.P. shareholders’ money, and joined a multibillion-dollar competitor with H.P. in its sights — and there wasn’t a thing H.P. could do to stop him. Confidence-inspiring, this ain’t.

http://www.nytimes.com/2010/09/11/business/11nocera.html?_r=1

September 06, 2010

Sad day for Oracle employees. HP sues Hurd !

"After having been chairman and CEO of the largest tech company in the world, it's a bit of come-down for Hurd to become co-president of Oracle. Does he have a promise from Ellison that he'll be CEO within a given period of time? Or was it simply too alluring for Hurd to get back to work and ensure that people would change the subject from his ignominious exit from HP? " (http://tech.fortune.cnn.com/2010/09/07/the-larry-ellison-mark-hurd-and-safra-catz-show-at-oracle/?source=yahoo_quote)

Hurd Is Now a President at Oracle

H-P Sues Hurd After Oracle Appointment

August 31, 2010

Why H-P Buyback Is Bad News For The Economy

Wall street Journal : the company said it will spend $10 billion buying its shares, which are languishing near the 52-week low. The timing defies the tendency of U.S. corporations to buy their own stock during the high points of the market and avoid buy backs during the troughs.


The latest buyback also is clearly a nod to investors who have endured months of turmoil, from CEO Mark Hurd’s surprise resignation to a bidding war for 3PAR, a relatively obscure network storage company. Concerns about a leadership void and concerns about overpaying for 3PAR have driven H-P shares down to yearly lows.

It is important to put the latest authorization into perspective. The $10 billion comes on top of $8 billion in buybacks authorized in November 2009. The total far exceeds the amount of money that the company has spent each year on M&A for the past nine years, excluding 2008, when the H-P spent $13 billion on Electronic Data Systems, according to data provider Dealogic. Also consider that the buybacks total 17% of H-P’s market capitalization. Investors, of course, love the buybacks. H-P shares are up 1.75%, while the broader market is down by nearly that amount.

But looking beyond the corporate parameters of H-P, the buyback arguably sends a dispiriting message about the state of technology industry and the overall economy. Consider that the buybacks come as H-P is spending increasingly less on Research and Development. In 2009, the company’s R&D budget was $2.8 billion, not much more than the the $2.3 billion it spent in 1998. As a percentage of revenue, the drop in R&D has been dramatic. R&D was 2.5% of revenue last year, compared with 6% of revenue in 1998.

To be sure, H-P’s revenues have expanded greatly over the past decade since it acquired Compaq and Electronic Data Services. Nonetheless, the fact that its R&D has not kept pace perhaps signals that a company, once known for its innovating prowess, is taking the easier route in keeping its shareholders happy.
As the recent bidding war for 3PAR illustrates, it is easier (and logical) to spend billions buying technology that others have created than spending that money on R&D that may or may not produce a viable product.
But that is not ideal for the broader economy, which benefits from the creation of new products to help it grow and create jobs.

Amid great economic uncertainty, H-P likely figures it can get more bang for its buck by focusing on the financial engineering of share buybacks than on the engineering of new technologies that made the company famous.

August 17, 2010

Never Discount the Grumbling Workers

(Article : TheStreet.com. Image : http://fuckyoumarkhurd.com/)

Setting aside these more salacious details, I thought the most interesting new information came from Joe Nocera of The New York Times Friday. In his column, Nocera suggests the real reason Hurd was shunted aside was that he'd lost the trust and respect of the HP employees, and that charges of sexual harassment and inflated expenses merely masked that fact. Nocera illustrates this with some damning faint praise for Hurd from analysts and HP employees, both former and current:
"He was a cost-cutter who indulged himself."
"Mr. Hurd cares about one thing, how much money is in it for him. As an HP employee I see it every day. We don't have the tools to do our job, but he isn't doing without anything and doesn't care."
"He didn't have the support of his people. . . . he seemed to be the only one benefiting from HP's success"
"I was delighted to see Hurd go."
" . . . he lacks the moral character to be CEO."

I believe these latest revelations show board did lose trust in Hurd, thus providing reason to suggest he move on. However, I also believe Nocera has put his finger on a critical point: namely, the depth of HP employees' resentment toward Hurd for well over a year. About a year ago, for instance, I wrote about my belief that Hurd was not such a great CEO as what was portrayed by Wall Street analysts and investors -- and I remember being very surprised at the immediate and strong reaction I got from then-current HP employees. They were all united in their antipathy for Hurd.

They complained about how he'd cut the business to the bone but didn't have any ability to grow the company's revenues. They talked about his hypocrisy in forcing 5% across-the-board paycuts while doubling, tripling, or quadrupling senior executives' total compensation in the same year. Most of all, they complained of Hurd's total inability to connect with HP employees and a disregard for the vaunted "HP Way" of the past.

The comments and emails went on and on. Many pleaded with me not to share them publicly for fear of losing their jobs. Some of the comments I received for my most recent HP article, which published last Wednesday following Hurd's departure, further highlight the employees' sentiment:
"As a long-time HP employee, I have seen this incredible greed by our executives for some time while the employees have suffered income loss: loss of benefits and, more importantly, loss of jobs. There is no remnant of Bill and Dave's company left."
"Hurd did the same thing to HP that he did to NCR, a tech firm Hurd headed prior to his term at HP. He squeezes out profits in the short term at the expense of the long-term viability of the company. HP's IT information technology has been gutted, there is little to no growth in existing businesses, morale is terrible, teamwork is dead thanks to forced rankings, there is no innovation, and pretty much everything is outsourced.
"I agree there is nothing left of Bill and Dave's company. Working for them was such an inspiration. They were the epitome of humility and conservative frugality. They treated us so well and we were frugal too to repay them. Our management-development department worked hard to capture their style in our programs, to teach managers the "HP Way.'"

I remember chatting with some investors last year about these kinds of emails and comments. They immediately discounted them and defended Hurd. They said things such as:
"What do you expect from a bunch of workers? These are the whiners that Hurd probably already cut out of the business."
"Employees always complain. What matters is that Hurd's making the numbers. He delivers what he says he will."
"'The HP Way" -- who cares? That's not how business is run today. Fiorina should have whipped this company into shape, and Hurd finally went in there and did it."

I believe there's some truth both in the side of the employees and that of the analysts. But what's striking to me is just how easy it was -- before Hurd was forced out -- for outsiders to belittle the importance of employee satisfaction. Obviously people who comment on a story or email an author to complain are going to be the ones most upset about Hurd, and maybe there was a silent majority who thought he was doing just fine. For me, however, the quantity of strongly upset employees last year was a clear warning sign of trouble ahead for the company and for Hurd. You can't just stuff those kinds of feelings down for long without some problems cropping up down the road.

It's also interesting to reflect on the investors' comments now and see how quick they were to attribute HP's success to Hurd alone, and to discount the crucial nature of culture and of workers' feelings. I'm not saying all investors and analysts need to start holding hands and singing "Kumbaya" when they look at their price-to-earnings ratios. If nothing else, though, the HP affair shows that -- in this age multiple rounds of layoffs and real economic hardship that affects millions of workers -- investors need to examine the happiness of the remaining workers with the CEOs and senior executives who are leading them.

http://finance.yahoo.com/news/Never-Discount-the-Grumbling-tsmp-982139253.html?x=0&.v=1&.pf=family-home&mod=pf-family-home

August 10, 2010

HP Shouldn't Pay for Hurd's Mistakes

" NEW YORK (TheStreet) --HP's ousted and disgraced Chairman and CEO Mark Hurd screwed up and investors have to pay for it. I don't get it.

Despite concluding that Hurd's conduct "displayed a profound lack of judgment", HP gave him a big-money sendoff to the tune of $12.2 million in severance payments, an extension of the deadline to cash in options on 775,000 HP shares, pro-rata vesting and settlement of 330,177 performance-based restricted stock units, settlement on December 11, 2010 of 15,853 time-based restricted stock and eligibility for continued group medical and dental coverage for up to 18 months., according to an SEC filing retrieved through EdgarOnline.

Why should a single dime come out of the bottom line? Why should a single share be awarded to someone who, in his own words, "did not live up to the standards and principles of trust, respect and integrity" that he demanded of others at HP?
Make no mistake, Hurd wasn't hurting for the money. As
Eric Jackson pointed out in his recent column titled Mark Hurd's Excesses Were in Plain Sight, Hurd's total compensation for 2008 was $43 million, making him the fourth-highest-paid CEO that year.
HP's board may think it is fair to reward Hurd for the work he did to set the company back on the road to success -- and there are few who don't acknowledge that the company improved under his leadership -- but what about the damage to HP's reputation that Hurd also inflicted in the end?


The performance of a leader must be measured -- and rewarded -- based on more than the numbers. Integrity matters. Trust matters. We're talking about "violations of HP's Standards of Business Conduct" by the man who held ultimate responsibility for corporate conduct.
Hurd should have been fired, but the board on which he had served as chairman didn't have the stomach for it.
It may appear that the board took the high road by pushing Hurd out, but the severance agreement shows that old-school, nepotistic boardroom behavior is alive and well in America.
The message to investors is clear: The instinct among board members to look out for their own is stronger than their sense of duty to shareholders "

Jodie [Fisher] Will Likely Get 300,000 Thank You Notes’

By Michael Corkery, Wall Street Journal

If ever there was a case of schadenfreude, it is on display by the employees, past and present, of Hewlett-Packard.
As one of worker put it, “we had an office party this Monday at HP HQ,’’ to celebrate the resignation of CEO Mark Hurd amid an expense account scandal. In short, dozens of readers identifying themselves as H-P employees or ex-employees have left comments on Deal Journal cheering Hurd’s resignation.

Hurd may have been beloved by Wall Street (H-P’s stock tumbled 8% on Monday, but rose more than fourfold during his five-year tenure at the H-P helm) but he wasn’t loved by everybody inside the technology giant where he had implemented draconian cost cuts, including laying off thousands of people.
“Many HP employees were dancing in the hallways today, the witch is dead. Morale was at an all-time low at lunch last Friday,’’ wrote one employee. “Jodie will likely get about 300,000 thank you notes.”
While expressing delight in his resignation, many objected to the “golden parachute” that will cushion the fall from grace. Hurd, who ranks among the top paid CEO’s in the nation, will walk away with about $28 million in severance and stock options.“If any employee was found fiddling with their expenses they would be marched out of the building and tossed into the street. No compensation. Why then should Hurd get any compensation?” asked one Deal Journal commenter.
There were some who called out Hurd’s apparent hypocrisy: A CEO who was ruthless in his efforts to cut expenses was accused of falsifying his own expense reports.
A reader identifying himself as Joe the engineer from HP wrote: Hurd’s employees left in droves (including me). The rest would have left when the economy got better… those that he didn’t fire, anyway. I love watching all this happen to him, couldn’t have happened to a better guy. Thanks Mark for making me take all that ethics training - looks like YOU were the one who needed it.
Judging from the comments, much of the animosity appeared to come from EDS, the software company that H-P acquired in 2008.
An ex-EDS employee writes: “God he deserved it. The way we (EDS ) employees were treated after the merger, was just terrible. HP made their numbers basically through the EDS division and we got rewarded with a 20% pay cut. Mark also took a pay cut on his base salary - note base salary not on his bonuses! I am glad that he will be using his bonus money to pay his lawyers.”
Of course, it is unclear whether such comments are a representative sampling of the H-P morale or the venting of a few disgruntled workers. But it is clear that Hurd didn’t inspire much love from some corners of the company.

August 07, 2010

H.P. Ousts Chief for Hiding Payments to "Friend"

Yes !!!

"conflict of interest, failed to maintain accurate expense reports, and misused company assets".

"The woman’s lawyer contacted the company in late June, charging sexual harassment. While the directors were investigating that charge, they found inaccurate expense reports that covered payments made to the woman. The directors said, however, that the sexual harassment charge was unsubstantiated.

The board charged that Mr. Hurd, 53, failed to disclose his use of company funds. It urged Mr. Hurd to resign, but he balked and offered to compensate the company for the disputed funds, said to range from $1,000 to $20,000, according to a person close to Mr. Hurd who was briefed on the situation but was not authorized to speak publicly.
The board, however, insisted. “This was a necessary decision,” said Marc L. Andreessen, a venture capitalist and a director.
...
Mr. Holston also said Mr. Hurd used inaccurate expense reports to conceal the relationship with the woman. Mr. Hurd, who is married, has denied having a sexual relationship with the woman, according to the person briefed on the situation. Mr. Hurd declined comment.
Gloria Allred, the celebrity lawyer who has agreed to represent the woman, said, “We want to make clear that there was no affair and no intimate sexual relationship between our client and Mr. Hurd.” She declined to make the woman available for an interview or to identify her.
The company’s stock plummeted almost 10 percent on Friday on the news of Mr. Hurd, known for his straight-talking, analytical approach to business. Mr. Hurd rewired H.P. through layoffs, acquisitions and relentless cost-cutting measures.


The woman worked for H.P. between the fall of 2007 and the fall of 2009, having been hired by the office of the chief executive, the company said. Sources close to the company and familiar with the situation said that over a number of months, the contractor attended events for H.P. in Asia, Europe and the United States, and often dined alone with Mr. Hurd after the events. The contractor’s fees ranged from $1,000 to $5,000 for events in the United States and up to $10,000 for overseas ventures.


Even though the same contractor was present, Mr. Hurd said that he dined alone or with a different person on his expense reports, these people said.
A person briefed on this situation said Mr. Hurd had described the situation as “surreal and bizarre.” Mr. Hurd has denied any romantic context in the relationship with the contractor and talked about the board being swayed by the potential public relations problems that would follow accusations of sexual harassment.


Mr. Hurd, who was in the midst of contract negotiations with the board, did not file his own expenses, this person said. H.P.’s board and Mr. Hurd had, over the past month, been negotiating a new contract that would have had him earning $100 million over the next three years, according to a person briefed on the meetings. "

http://www.nytimes.com/2010/08/07/business/07hewlett.html?_r=1

July 08, 2010

Anger in UK.

Network World

An announcement that HP will cut more than 900 jobs in the UK by October has prompted anger from the Unite union

HP has announced internally that 934 jobs will be axed in the UK by October.
According to Unite union, HP has a 16,500-strong workforce in the UK, which could also be affected by a further 1,000 job cuts from November, which the union said is a "proportional" part of the 9,000 job cuts worldwide that the company announced last month.

The union is planning to meet with HP in the next two weeks for negotiations.
In a statement, HP said: "[The proposed changes] were first discussed with the HP European Works Council in November 2009 and have been part of an ongoing consultation process since then." HP also said that the "proposed changes" were "part of the company's ongoing review of its business".

However, Unite said that the latest round of job cuts was particularly painful after seeing nearly 4,000 jobs being cut over the past two years since HP took over EDS. "This will create further insecurity and uncertainty in HP with the threat of yet more redundancies to come," said Peter Skyte, Unite national officer for IT and communications. "Our aim is to reduce and to avoid compulsory redundancies. The fact that the company still retains nearly 2,000 temporary staff and contractors merely adds insult to injury," he added.

Although Skyte said that it is "too early" to say whether the union members would go on strike in response to the job cuts, he did not rule out industrial action. In April, after a series of strikes and talks through the Advisory, Conciliation and Arbitration Service (ACAS) regarding a dispute over pay and redundancies, Public Commercial Services (PCS) union were in the process of finalising the details of a pay and redundancy offer for staff working on the Department for Work and Pensions contract. PCS was unable to provide a status update at the time of writing.
Meanwhile, Skyte warned that the job cuts at HP meant that that fewer people were having to do more work.

"Managers are concerned that they don't have enough people to do the work," he said, saying that work for clients, including Rolls Royce and the Ministry of Defence, could be affected.
Unite also said that workers at HP sites in Bracknell, Bristol, Hook, Erskine, Milton Keynes, London and Warrington are likely to be affected by the jobs cull. Last month, HP was forced to pay BSkyB a total of £318 million in full and final settlement of a high profile lawsuit over a failed CRM implementation by EDS ten years ago.

June 24, 2010

HP to move work to low-cost offshore locations

IDG/Blooomberg and Businessweek

Hewlett-Packard's Enterprise Services business is counting on automation of its services and an expansion of its strategy to move work to low-cost offshore locations like India, to help cut costs and get more efficient, an executive of the company said on Wednesday.

The roll out of automation is also likely to be more efficient at the company's large offshore centers, said Robb Rasmussen, vice president and general manager for Best Shore Delivery of HP Enterprise Services on Wednesday.

"One of the most optimum places for automation is within an offshore location," Rasmussen said. The roll out of technology to automate a service, and the training of staff can be done more efficiently in these locations, as they have thousands of staff serving a large number of clients, he added. HP said earlier this month that it was cutting 9,000 jobs over three years as it restructures its enterprise services business and automates the services it offers enterprise customers.

Some other companies such as Dell have also said they are introducing automation to make their services more efficient. HP said it would invest US$1 billion in this connection, while also hiring 6,000 staff for the new services initiative, including some in services delivery.

In some offshore locations, including India, HP may however see net additions to the number of staff, Rasmussen said. The company is still hiring in India and some other offshore locations, and does not plan a reduction in staff in these countries, he added.

India is already the second largest location for HP's services business in terms of number of staff.
HP also has a majority-owned services subsidiary in Bangalore, called MphasiS, which became part of the company after its 2008 acquisition of Electronic Data Systems.

As its business grows, HP's enterprise services is having an increasing number of staff in offshore locations, Rasmussen said. The company has 14 offshore services centers across Asia, Eastern Europe and Latin America.

Customers are increasingly opting for an "India plus one" offshore delivery model, which includes near-shore delivery from locations in the customer's time zone, in addition to delivery from India, he added.

Automation will further drive down costs, as key services like applications management will be done with fewer people, Rasmussen said.

Link to article : http://www.businessweek.com/idg/2010-06-23/hp-services-to-cut-costs-by-automation-and-offshore-delivery.html

June 03, 2010

H.P. Will Cut 9,000 Jobs

HP announced Tuesday that it would cut 9,000 jobs (3678 in EMEA) and take a charge of about $1 billion over several years, as it consolidates and automates data centers. A.P.

During the same time period, H.P. will hire 6,000 new workers in sales and service delivery positions, said Jane McMillian, an H.P. spokeswoman. Under MArk Hurd, the company has shaved costs by regularly cutting large numbers of staff. In 2005, Mr. Hurd cut 15,300 jobs, in part by consolidating the data centers running the company’s own operations.

In 2008, after H.P. acquired Electronic Data Systems, it cut 7.5 percent of the company, or 25,000 people, and reduced the salaries of others by 20 percent in some cases. In May 2009, H.P. announced that it would cut 6,420 people.

Mark Fabbi, a vice president and analyst at Gartner, compared Hewlett’s data center division to factory floor during the Industrial Revolution. “In the Industrial Revolution, they put things on an assembly line and didn’t need those jobs anymore,” he said. “This is the same thing applied to H-P, a hundred years later.”

The company said it would record about half of the $1 billion charge in the third quarter and the rest by the end of fiscal 2013. The layoffs and $1 billion charge will result in savings of $500 million to $700 million a year, the company said.

HP criticized for earnings accounting

Hewlett Packard Playing Games with Earnings CNBC, 06/2 , Herb Greenberg

First, housekeeping: Glad to be back!
Second: My inaugural "Herb on the Street" on CNBC (see video below) focused on whether Hewlett Packard is minding the earnings GAAP.

GAAP, of course, is generally accepted accounting principles. My beef: HP [HPQ 47.27 1.69 (+3.71%) ] presents itself to Wall Street as a non-GAAP company and has decided to exclude a $1 billion charge from non-GAAP earnings.

The issue of GAAP vs. non-GAAP is a longtime, simmering issue on Wall Street and it really gets down to this: Should investors view companies the way the companies want to be viewed or the way GAAP intended them to be viewed?

I say the latter, if the charges are not one-time in nature and are part of an ongoing restructuring/acquisitions strategy, which appears to be the case at HP. Acquisitions, in fact, are a stated part of HP's business strategy. (Note its recent deals to acquire Palm [PALM 5.71 0.05 (+0.88%) ] and 3Com.)

Some background:
* Two years ago, HP acquired EDS, the enterprise services company, for $13.5 billion.
* At the time the company said the deal would be accretive to GAAP earnings in 2010.
* Now the company is taking a $1 billion charge over a multi-year period, but only reporting that charge in GAAP results.

The result, in my opinion: Never mind that it appears EDS won't be GAAP accretive in 2010, it would appear that non-GAAP results will be artificially inflated.
Furthermore, it's easy to see why HP likes to keep the charges out of non-GAAP: Over the past three years, as the accompanying chart shows, non-GAAP earnings per share have beaten GAAP earnings per share.

I'm not the only person who has that view. On a conference call held by HP Monday to discuss a new strategy for its enterprise business, Sanford Bernstein analyst Toni Saccanoghi-who is generally known for asking the tough question-asked why the $1 billion charge would only be included in GAAP.

HP CFO Cathie Lesjak responded, saying, "While business charges in non-GAAP are typically more routine, routine rebalancing of activities and adjustments to changing business conditions. So this is really a structural change."

Perhaps, but as Saccanoghi responded in a note: "Given that HP's actions appear to be strategic in nature, we believe this could (and should) raise questions among investors. We note that HP has taken restructuring charges of more than $50 million in 10 out of the last 20 quarters (and restructuring charges of any magnitude in 17 out of the last 20 quarter) and this current charge may reinvigorate investor debate over HP's use of GAAP vs. non-GAAP earnings."
As well it should-and not just as it pertains to HP.

March 30, 2010

No. 1 Corporate Citizen !

It's not a joke : Corporate Responsibility Magazine gives HP high marks in environment, human rights, employee relations, philanthropy, and more...
HP took the top spot in Corporate Responsibility Magazine’s 100 Best Corporate Citizens list for 2010, rising from fifth place last year. The list is considered the preeminent of its kind.
“Global citizenship is in our DNA at HP. We hold ourselves to very high standards, so we are very pleased and honored to be recognized for our efforts, particularly by this respected source,” said Gabi Zedlmayer, vice president, Global Social Innovation.

Global citizenship is one of HP’s seven corporate objectives, rooted in the company’s founding values and key to success. While this recognition highlights HP’s most recent accomplishments, global citizenship has influenced how it has run its business for more than 70 years.
“Our work in this realm encompasses HP’s commitment to align our business goals with our impacts on society and the planet,” Zedlmayer continued. “We recognize that our actions can make very real differences in the quality of people’s lives around the world, and we will continue to work toward creating a legacy of real and lasting change.”

How the ranking is determined :
The 100 Best Corporate Citizens List is based on more than 360 data points of publicly available information in seven categories, weighted as follows:
Environment — 19.5%
Climate Change — 16.5%
Human Rights — 16%
Employee Relations — 19.5%
Governance — 7%
Philanthropy — 9%
Financial — 12.5%

March 24, 2010

HP faces strikes in England. Again !

March 22 (Bloomberg and San Francisco Business Times)

The Public and Commercial Services Union said up to 1,000 members working for Hewlett Packard Enterprise Services will take a further four days of strike action in a dispute over pay and job security.

Workers at Hewlett-Packard Co. plants in the north of England plan for four days of strikes, starting next week. The Public and Commercial Services Union, based in London and representing some 300,000 members in the United Kingdom, said as many as 1,000 of its members will strike for four days at HP plants. Workers at some of the sites have already walked off the job for two days earlier this month.

Work stoppages are planned for March 29 and 30 and for April 6 and 7. They'll affect plants formerly run by Electronic Data Systems, which is now owned by HP. The plants are in Newcastle, Washington, Preston, Lytham St. Annes and Norcross.

"There has been growing anger amongst staff since HP took over EDS ... with 3,400 staff already axed across the UK. Staff have been further angered by the imposition of a pay freeze last year and for 2010 despite the company delivering record revenues worth billions of dollars," the union said. Mark Sewotka, the general secretary of the union, said employees at the HP plants felt "betrayed. "Hewlett-Packard bought Plano, Texas-based EDS in 2008 for $13.9 billion and laid off some 25,000 of its workers. Last September, HP renamed the unit HP Enterprise Services. Perennial presidential gadfly H. Ross Perot started EDS in 1962.

January 21, 2010

Major strike in UK

Computerworld

More than 1,000 HP staff in the Public and Commercial Services Union are set to strike tomorrow after talks to resolve a dispute over pay and job cuts broke down. HP Enterprise Services workers taking part in the strike include those based in Newcastle, Washington, Preston and the Fylde Coast. The action will target four sites working mainly on IT contracts for the Department for Work and Pensions (DWP), the Ministry of Defence (MoD) and General Motors.

The workers' complaint centres on a pay freeze imposed for this and next year, as well as on the 3,400 EDS staff who have been made redundant since HP took over the company in 2008, and the 1,000 job losses planned for the first half of this year. Mark Serwotka, PCS general secretary, said: "Strike action is not a step that our members take lightly. They have worked hard to help the company deliver fourth quarter revenues of $30.8 billion yet have been slapped in the face with job losses and a pay freeze for two years running." Jim Hanson, national officer at PCS, said that the main disagreement with HP's offer is over pay, with HP offering to only remove the pay freeze for two years, rather than permanently. Also, Hanson said that HP is refusing to recognise staff they hired directly as being part of the PCS talks, despite them also being members.

According to HP, 288 union members rejected the company's latest offer and voted to continue with the planned strike. "We are disappointed to confirm that a small number of employees have voted in favour of local industrial action on Friday. A reasonable offer was put on the table by HP, in response to the union's requests, however this was rejected without a counter offer being proposed by the union," HP said. "We will continue to maintain a dialogue with the union in an attempt to avoid any further form of action." The company also said that it has put a plan in place to deal with the impact of the strike action, including reducing non-urgent project work and moving resources to prioritise critical work.

In December, HP narrowly avoided a strike by PCS members by agreeing to sit down to talks at the eleventh hour. HP was then due to meet with the union on December 16 to try and reach a settlement for workers. Last week, HP averted nine strike days that were due to be undertaken by customer service engineers in its CDS business, by agreeing to a confidential deal on pay and pensions with trade unions. Computerworld UK understands that this agreement addressed some of the employee concerns around the potential scrapping of a £2,000 performance bonus scheme and a final salary pensions. However, neither HP nor the Unite trade union gave details of these discussions.

December 12, 2009

HP faces strike action in UK over pay and pensions

V3.co.uk,

The UK's largest trade union Unite is balloting members working at HP on strike action after the company changed the status of some of its engineers and support specialists. The union announced the action over the company's planned changes in staffing rules, which would see 150 employees of HP IT services shifted to jobs at HP CDS, which would see them losing final salary pension schemes and performance benefits worth around £2,000.

"Our members face cuts to their pay and pensions and have no choice other than to begin an industrial action ballot. This is the latest in a series of attacks by the company on our members' pay and conditions, while senior executives and shareholders do very well indeed,' said Peter Skyte, a Unite national officer. "Unite remains willing to seek a resolution to this dispute with HP but not on the basis that one employee's pay cut results in a HP executive's pay and bonus increase.'

In its last financial report HP reported profits of £973 million for the quarter, and said that European demand was lower than any other major market. The company has already confirmed it is cutting some of its UK staff but hasn't confirmed numbers, although Unite expects 850 jobs to go. It has also cut back on staff at EDS and has repeatedly cut salaries for those staff still employedUnite has become increasingly active in the IT sphere, taking on IBM and Fujitsu over pensions and job losses.

If the ballot is successful it will be the first time HP has faced a British strike.

November 18, 2009

EDS staff voting on strike action in UK

Computerworld : staff at EDS, who are now employed by HP, are voting in a strike ballot as they express their “anger” over upcoming job losses.

Most of the 1,000 staff, who are members of the PCS union, work on a series of IT contracts at the Department for Work and Pensions that are worth £3 billion and run until 2015. They work in locations around the UK, including Newcastle, Washington, Preston and the Fylde Coast, on areas including desktop and datacentre management, and application maintenance and support.

There had been “growing anger” among the staff since HP bought EDS in 2008, the union said. Their complaint centres on the 1,000 job losses planned for the first half of next year, as well as a pay freeze, a growing workload, and voluntary salary cuts. Some 3,400 staff have already been made redundant since the takeover.

The PCS ballot offers staff the chance to vote on a series of strikes of one or two days, as well as action that falls short of a strike. Staff have until 30 November to vote. Mark Serwotka, PCS general secretary, said: "There has been growing anger amongst staff who are facing yet more uncertainty about their future.” While employees had been “contributing significantly to HP’s revenue” and taking on more work, “their reward is more job cuts, imposed pay freezes and pleas from the company to take a voluntary pay cut”, he said.

Serwotka urged HP workers to tell their managers that “enough is enough". In a statement, HP said it “respects the rights of its employees” to be part of a union and would continue dialogue with the aim of avoiding a strike.

HP is facing a stike ballot on another front, regarding 150 of its service engineers, who mainly work from home and in the field. Those workers are complaining of a reduction of pay and benefits, and the result of their vote is expected in the next few days.

Elsewhere, rival Fujitsu narrowly avoided a three day stike last week, after the Unite union said there had been some progress in discussions on pay and job cuts. But the situation is not resolved and the union did not rule out further strike action.

September 27, 2009

Is there a Board ?

TheStreet.com

Mark Hurd was brought in to take the helm at Hewlett-Packard in 2005. He's well regarded by Wall Street for turning the company from a bureaucratic has-been to a market leader again. In the first 2 1/2 years of Hurd's tenure as leader, HP's stock increased 137%. For the last two years, however, HP's stock performance has been mediocre, dropping 5%. Although that was better than the Nasdaq, it tracked that index very closely over that period

While Hurd deserves credit for turning this company around in the early part of his tenure by slashing costs and increasing focus, there are some very troubling aspects about how he, his management team and his board approach executive compensation and governance that suggest investors should steer clear of this Silicon Valley icon until it gets its act together.

Although HP's performance has hit the wall in the past two years, Hurd's pay -- and the pay of his management team members -- has dramatically increased. For 2008, Hurd's total compensation reached $43 million, which made him the fourth highest paid CEO in America for 2008. Hurd's total compensation increased 73% from his $25 million in 2007, even though HP's stock price declined 29% in 2008.

On his senior management team, the sharp compensation increases in 2008 were also noteworthy. CIO Randy Mott's total compensation went up 400% last year to $28 million. Imaging EVP VJ Joshi's total compensation jumped 83% to $22 million. Personal Systems EVP Todd Bradley's total compensation jumped 263% to $21 million. Technology Solutions' EVP Ann Livermore enjoyed a 31% bump in total compensation to $21 million. And CFO Catherine Lesjak got a 49% increase in total compensation to a more modest $6 million.

What also raises eyebrows about these sharp executive raises, aside from it happening in the face of a sharp stock price drop for the year (and the general market uncertainty which remained at the end of the year), is that 2008 was also a year in which these same leaders imposed mandatory 10% pay cuts for other executives and 5% cuts for the rest of HP's workforce. It hardly seems like this select group is shouldering the pain like the rest of the employees.

At Dell, the magnitude and the general direction of total compensation were far different than HP for 2008. Michael Dell's total comp dropped 9% in 2008 from the previous year to $2 million. Other senior executives on Dell's management team decreased or modestly increased to an average total compensation for the year of $9.5 million -- or less than half of what their HP counterparts took home for the year.

But what should be most rankling to HP shareholders -- and a very good reason to avoid the stock in the near term, as it speaks to the values by which this board and management team operate -- are the perks these executives are asking for and receiving from the board.For example, last year HP shareholders paid $7,472 for travel expenses related to Mark Hurd's family accompanying him to business meetings. Expenses for Hurd's security service roughly doubled to $256,000. Shareholders paid $500,000 combined in 2007 and 2008 for legal fees associated with bringing over CIO Randy Mott from arch-rival Dell. All senior executives availed themselves of about $18,000 worth of financial advice in 2008 (about four times the amount Dell senior executives received that same year).

Perhaps the biggest bonus for being an HP senior executive is getting access to the fleet of corporate jets for personal use. Shareholders forked over $136,000 for Mark Hurd's personal use of the aircraft in 2008. Todd Bradley's personal use of the aircraft cost $128,000 in 2008, which was actually down from $327,000 worth of personal travel in 2007.
HP explains in its proxy filing that for "purposes of reporting the value of such personal usage in this table, HP uses data provided by an outside firm to calculate the hourly cost of operating each type of aircraft. These costs include the cost of fuel, maintenance, landing and parking fees, crew and catering and supplies."

I think it's completely unacceptable for shareholders to pay for this personal use perk. However, this explanation left me with more questions about these numbers. Who is this outside firm that provided this estimated hourly cost? What in fact was the hourly cost? How do shareholders know that the hourly cost was a fair market rate? Finally, what were these personal trips?I'm not even sure how it's possible for Todd Bradley to have racked up $327,000 worth of personal travel in 2007. Did he have time to show up for work that year? Call me a conspiracy theorist but isn't it possible that this outside firm vastly under-stated the actual (fair market) hourly cost of using these aircraft for personal use? How will shareholders actually know unless the company releases the flight logs and numbers ?

Dell and his senior executives charged no personal use of their aircraft to its shareholders.A later footnote in the proxy filing for Hurd's personal travel says that the first 25 hours of personal travel are included and are "grossed up." Hurd owes taxes on the value of that perk, but HP's board has decided that HP shareholders should pay Hurd's taxes instead of Hurd.The same footnote later says that if Hurd's spouse is "requested by HP" to travel with Hurd, then the company "grosses up" that amount, too. The internal process that goes on in determining the company request is not described. It could be as simple as Mark Hurd leaning over and saying to his assistant: "I'd like to go play golf in Hawaii this weekend with the CEO of one of our clients on business. Can you write me a quick email saying that, on behalf of HP, you're requesting that my wife fly with me?"
And don't forget the minor scandal the erupted last January, when blogger Michelle Leder of Footnoted noticed that HP had "grossed up" Hurd $79,814 for taxes he paid on meals involving his family. (Ann Livermore and VJ Joshi also got "grossed up" $10,000 apiece for meals with their families.)
Michelle estimated that, to receive a "gross-up" of this amount, Hurd and his family would have had to run up food bills during the year of more than $243,000. HP protested, saying it had made an error in its calculations and even refiled its proxy with the SEC. Magically, Hurd's "gross-ups" for his family meals shrunk to $3,285. HP's error and refiling could have simply been a decision on its part, based on the angry reaction of employees and shareholders, for Hurd and all executives to simply cover these meals and their taxes themselves. Let's face it: It wouldn't have been a hardship for any of them based on their compensation last year.I don't mind pay for performance. I do mind pay for non-performance and I mind perks for breakfast, lunch, and dinner. And in a year of across the board pay cuts? Where is their shame?The board is equally or more to blame of course. After all, they approved all this. I was particularly surprised to note that Ken Thompson has served on the HP board for three years now.

Thompson is one of the most disgraced CEOs coming out of the financial crisis.He ended up destroying the fifth largest bank in America, Wachovia, by pushing it heavily into the area of subprime mortgages. When you destroy a company with $8 billion in annual profits, you shouldn't have the right to continue serving as a director and get $300,000 a year for doing so.
It was announced last week that Web pioneer Marc Andreesen would join HP's board. I hope he can help reform the company's governance, but I don't think it's likely. In 2006, Andreesen sold his company Opsware to HP for $1.6 billion -- making him indirectly beholden to Hurd and the rest of the board for his payday. That means Andreesen will likely be another voice around the table tacitly approving whatever Hurd wants to do and pay himself.

Disclosure: At the time of publication, Jackson did not hold any positions in the companies mentioned.