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  1. #21  
    I wouldn't be surprised if that report didn't just become the final death knell for the OS as we know it. You don't fly through 2.85BB (however way you want to read the financials) and decide that throwing a few more billion at it is a suitable answer.

    Let's put it another way: They've dug a 2.85B hole webOS would have to come out of--on top of additional investment--before it can break even. Think about that for a moment.

    Microsoft was able to do it with the original Xbox because it had tens of billions in cash--not even talking market cap--hanging out doing nothing and it truly doubled-down to break into the industry. (It has 55B in cash right now on a market cap of 250B.)

    HP has 12.95B in cash on a market cap of 55B as of Jul 31, 2011. A 2.85B hit hurts like hell.
    Last edited by vanadium; 11/21/2011 at 04:41 PM.
  2. #22  
    Wait, 3.3B on top of initial 1.2B?
  3. #23  
    From The Verge article:

    Whitman also promised that if HP decides to stick with webOS it'll do so in a "significant way," but we'll have to see if HP's management decides to throw more good money after bad — at this point HP's taken a bigger hit trying to kill Palm than it did to buy it in the first place. Here's HP's breakdown of the webOS costs from the last quarter from its earnings call:

    First, we took a total charge to operating income of $788 million. This was associated with the wind down of our webOS device business. This charge included a net revenue reduction of $142 million related to the sales incentive program, $548 million in costs of sales due to supplier-related obligations and inventory reserves, and $98 million in operating expenses and restructuring charges. Second, as a result of our decision to wind down webOS devices, we have taken an impairment expense of $885 million against the carrying value of goodwill and purchase intangible assets related to the acquisition of Palm.
    That's 1.65B right there and the 1.2B purchase price puts it at around 2.85B that webOS has cost HP.
  4.    #24  
    PDF HP financial results pdf downloads below:


    A summary about HP webOS figures . You can check PC front page full information:
    http://www.precentral.net/hp-reports...-billion-webos as well:


    Fiscal 2011 non-GAAP net revenue includes an additional $0.2 billion of revenue resulting from the exclusion of contra revenue associated with sales incentive programs implemented in the fourth quarter in connection with the wind down of HPs webOS device business, net of fourth quarter webOS device revenue. Non-GAAP earnings and operating profit information excludes after-tax costs of $3.3 billion, or $1.56 per diluted share, related to the wind down of HPs webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related.

    Fourth quarter non-GAAP net revenue includes an additional $0.2 billion of revenue resulting from the exclusion of contra revenue associated with sales incentive programs implemented in connection with the wind down of HPs webOS device business, net of webOS device revenue for the period. Fourth quarter non-GAAP earnings information excludes after-tax costs of $2.1 billion, or $1.05 per diluted share, related to the wind
    down of HPs webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related charges.


    The conference is on Q&A. Hope someone ask about webOS ????
    Attached Files Attached Files
    Last edited by akitayo; 11/21/2011 at 04:42 PM. Reason: more info
  5. #25  
    Quote Originally Posted by vanadium View Post
    I wouldn't be surprised if that report didn't just become the final death knell for the OS as we know it. You don't fly through 2.85BB (however way you want to read the financials) and decide that throwing a few more billion at it is a suitable answer.

    Let's put it another way: They've dug a 2.85B hole webOS would have to come out of--on top of additional investment--before it can break even. Think about that for a moment.

    Microsoft was able to do it with the original Xbox because it had tens of billions in cash--not even talking market cap--hanging out doing nothing and it truly doubled-down to break into the industry. (It has 55B in cash right now on a market cap of 250B.)

    HP? 12.95B on a market cap of 55B as of Jul 31, 2011. A 2.85B hit hurts like hell.
    They also had the advantage of competing in a market that resets itself every 5 years. They took a huge hit on Xbox but that was okay because it built the brand for the next 5 year cycle. Mobile isn't like that -- once you're buried, you stay buried because of the inherent differences (like ecosystems) in the market.
    dignitary likes this.
  6. #26  
    Great point, nappy. Absolutely spot-on.
  7. #27  
    egats!

    3.3b loss? my palm pre+ keyboard just sssssssstuttered at that number.

    please let webOS go to better stewards!
  8. #29  
    They must mention webOS. i mean, webOS generated more loss than PSG made profit?
  9. #30  
    Just think: HP actually ran the numbers and decided that taking a $1.65B hit in killing webOS (in addition to the $1.2B they had already spent) would actually save them money over continuing to develop and support it.
  10. #31  
    So, firesale price for webOS is $600M (20% of $3B, same ratio as $500:$100 for touchpad)!?
  11. #32  
    Most of the 3.3 billion loss was winding down webOS sales, remember how they recalled all 300K units from best buy after entering in agreement with them for the shelf space.
    If this helped you hit thanks.
  12. #33  
    Looking at the tables in Aquitayo's post:
    part of the footnotes pertain to Autonomy, some are not footnoted and about $1.65 billion is footnoted to webOS. Although we can't be sure, lets presume for talking points that the stuff that is not footnoted to webOS, belongs to Autonomy and other parts of HP.

    Almost $900 million of the WebOS footnotes is not cash they spent this year but rather represents a tax benefit they could get from writing down their purchase price. If they kept the devices as a going concern, obviously they could not take the deduction this year, they would have to stretch it out over many years. How they arrive at $900 million I'm not sure although perhaps they could argue that hardware was 3/4 of the value and software was 1/4 (The entire Palm purchase price of $1.2 billion represented the value of the money from webOS assets stretching out over a number of years, if they are going to stop production, then they doom themselves to loss of the $1.2 billion unless they can find a way to make money out of the software assets that are left).

    There was also all the cash they laid out to suppliers ($755 million) to make the webOS devices. Presumably you have to enter into contracts of some durations as suppliers incur costs not only to make devices but also to make prototypes and stock up for manufacturing (TouchPad Go and Pre3, I'm talking to you now). Once Leo and gang decided not to push out the devices any more, this was already a done deal that they would write down all the costs but of course incur almost no revenue to offset since they sold at firesale prices.
    Also they spent money for sales incentives and it looks they spent $140 million more than they took in on the firesale so all in all, they spent about $900 million on webOS.

    At the end of the day, they are still left with what they had after Leo's dooms day- namely the webOS software assets. HP probably could have sold webOS and made some money back on the $2.1 billion roughly they spent to date (allthingsD is now saying even Facebook will make a phone) but HP chose not to. They saw more value in keeping it than selling it.
    Meg said on the call that she wanted to invest in R&D in almost all their assets and she said earlier that she was leaning towards keeping webOS. Its still a big secret what their investment strategy will be for the co and for webOS.

    On the other hand, they seemed to say they want to invest in high-margin businesses. That might preclude webOS from playing any big role for now as they would need a lot of investment to ramp up hardware in the future. Still, they need to make tablets anyway for windows.

    For the record, I listened to the call on the TouchPad which did OK. I downloaded the 3 pdfs to the TouchPad in ubuntu and then was most easily able to read them in webOS Picsel app, more easily than in ubuntu. Seems OK for a 10-inch portable computer tablet.

    Edit: and here allthingsD is correcting their 3.3 billion to 1.65 billion, probably a lot closer to the truth, but writer still doesn't understand that half of that is not cash spent this year...
    http://allthingsd.com/20111121/doubl...lion-on-webos/

    Edit2: my guess is they are making their webOS decision this week (tomorrow?) and letting the team know after Thanksgiving. They sent out those Touchpads coupons to 3rd party devs and mgt had the face-to-face with the webOS team which could still be a positive sign but you never know with HP.
    Last edited by bluenote; 11/21/2011 at 07:06 PM.
  13. #34  
    I think by writing down all the webos losses, they now have a clean slate to start again. I.e., pull the bandage off in one quick pull. Now, if they choose to keep webos moving forward, they don't have that huge debt hanging over their heads and the profit numbers might look better.
  14. #35  
    Quote Originally Posted by vanadium View Post
    From The Verge article:



    That's 1.65B right there and the 1.2B purchase price puts it at around 2.85B that webOS has cost HP.
    So they spent more money trying to destroy webOS then they spent on acquiring it? It's not webOS that lost the money. It was HP trying to get rid of webOS that lost the money. They spent over $700 just to fire the hardware division? Wow how much does HP pay for its own printer ink just to print pink slips? I would have thought that they would have gave themselves a discount. They also spent $500 million to close hardware contracts (ie, litigation for violating contracts). There are only 1 million TouchPads in use. They could have gave them all away and only lost that much. Now the Palm assets are only worth close to $400 million? Makes since considering that they gutted Palm. HP investors should sue sue sue. This is ridiculous.

    You know back in 2001 when gas only cost $1.25 a gallon I bought an SUV with a 5.3 liter engine. I paid it off by 2006, right before the price of gas went up. Now it cost me $80 to fill the tank up ever week. That's $320 a month. Everyone tells me that I need to get another vehicle because it eats up twice as much gas as a car and maintenance cost on an older vehicle will eat me alive. Well my maintenance cost average about $100 a month (if something goes wrong that year). The cost of a new car with the space I need will run me $425 a month without even putting a drop of gas in it. After I pay for gas at $160 I'm looking at $585 just to get a "fuel saving" car. That's $165 more than I pay now just to keep the truck. That's not in figuring in maintenance cost for stuff that is outside of the warranty. So getting rid of the gas guzzler truck will cost me more than keeping it. HP has learned the hard way that it is sometimes cheaper to keep a so called money guzzler then it is to get rid of it. They should have did the math first.

    Lets get this story straight. WebOS did not kill HP. HP's own stupidity did.

    I don't really think webOS has a future now.
  15. #36  
    so were their any questions in the conference call about webOS?
    If this helped you hit thanks.
  16.    #37  
    At the begining of the conference call a guy said something very brief about webos purchase interest, of a list of things to talk during the conference that was not discussed after at any time. ???

    Well guys, I see webOS next only on printers, if HP dont want to invest more on the OS.
  17. #38  
    "Originally Posted by vanadium
    From The Verge article:
    That's 1.65B right there and the 1.2B purchase price puts it at around 2.85B that webOS has cost HP."


    You're counting some of the same money twice
  18. #39  
    New thread: just crossed Bloomberg
    http://forums.precentral.net/hp-touc...ml#post3249248
  19.    #40  
    wsj HP beats estimates video. Not so bad HP earnings:

    H-P Beats Estimates - MarketWatch Video
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