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  1.    #1  
    HP has moved up earnings call a day to Tues AM. Apparently an internal memo is warning of tough May to July quarter ahead. We will have to see tomorrow AM what CEO says. He is slated to be at allthingsd conf begin May 31 and invesot conference June 2.
  2. #2  
    Part of it could be all the money they are about to shell out to re-launch webOs. If they are truly serious about getting back into the game again they are going to have to throw down a jaw dropping amount of money on advertising.
  3.    #3  

    ...Both HP and Dell have benefited from the corporate refresh cycle, where companies spend billions to upgrade aging IT hardware, but face challenges in the consumer PC market.

    With rivals from Cisco Systems Inc (CSCO.O) to Oracle Corp moving into its key businesses, investors want signs the sprawling computer giant is making progress on a growth blueprint Apotheker laid out in March.

    The former SAP AG CEO wants to take HP into the competitive cloud computing market, where services are hosted from data centers. He outlined a plan to launch a "cloud marketplace" and an array of offerings for consumers, businesses and application developers...
  4. #4  
    doesn't surprise me. they haven't sold any new phones yet but invested a ton in webos. things will turn around soon (I think) esp after the phones start sellig and we see webos 3.0 popup all over the place (here's to hoping).
  5.    #5  
    Leo on call:

    needs to invest to expand capabilities so as to shift services to the higher profit categories in enterprise;
    decision not to just protect legacy biz but rather to invest in future

    will increase salespeople to sell add-on application services, no longer just a focus on IT outsourcing

    adding VP of Enterprise Solutions
    will form business solutions group-mobility, cloud, analytics etc

    needs to invest in IP for (cloud) services

    very excited about Touchpads coming out in summer; thinks will be convergence of connectivity-pcs, Touchpads etc
    Palm- included in corp investment
    making sure we get product right
    differentiated platform-from smartphones to tablets
    a lot of anticipation for TouchPad
    on track for summer release

    looks like they beat 2Q forecasts by wall street- commercial business and software did well, security software singled out--gained markt share

    3Q-thinks japan earthquake will depress results so cut forecast
    also some of data center costs have to occur first before revs come in

    consumer pc mkt-revs in 2Q declined 20% yr over yr!
    Last edited by bluenote; 05/17/2011 at 10:03 AM.
  6.    #6  
    HP: We Underinvested In Services, Says Apotheker - Tech Trader Daily -
    May 17, 2011, 9:01 AM ET

    HP: We Underinvested In Services, Says Apotheker

    By Tiernan Ray

    Hewlett-Packard (HPQ) CEO Leo Apotheker had more tough news for investors and analysts this morning on the conference call to discuss the company’s fiscal Q2 results and a reduced year outlook, reported this morning.

    Not only is the PC division struggling from lower consumer sales, but the services business is not where it should be, Apotheker suggested.

    “As I have been digging into our services business in joining HP and diving even deeper over the past couple of months, I have concluded that we had a solid strategy for Services, but we didn’t invest in the path to support the strategy,” said Apotheker.

    “Instead, HP focused on maximizing its shorter-term margins. We have over-executed operationally and underinvested strategically. As a result, our short-term margin expectations have been too high. This has impacted our ability to create sustainable growth for the long term.”
  7. sjaakb's Avatar
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    Quote Originally Posted by cyberprashant View Post
    doesn't surprise me. they haven't sold any new phones yet but invested a ton in webos. things will turn around soon (I think) esp after the phones start sellig and we see webos 3.0 popup all over the place (here's to hoping).
    Leo is getting clobbered by many in the investment community, whether righfully or not, it's never a good sign.
    WebOS is such a small part of HP's biz that it will take quite a while to positively influence the numbers.
    HPalm is up against it. They yet have to show "marketing" and "integration" for both enterprise and consumer sides. I'm sure they r talking to the big enterprise boys and their channel partners but w.o. product all you sell is "hopium".

    Nevertheless I hope WebOS will blow the doors off when the push (finally) occurs. Good for all of us.
  8.    #8  
    Quote Originally Posted by sjaakb View Post
    Leo is getting clobbered by many in the investment community, whether righfully or not, it's never a good sign.
    Its a good sign for those investors who make the right call; sheep rarely win on the Street.
    edit; stock opened down 6%
    Agreed thatLeo seems to say the customers are clamoring for add-on high margin services and the co doesn't have the services or the people right now to deliver--that is why he says he is investing.

    Interesting also they are moving to air shipments versus shipping by sea
    Last edited by bluenote; 05/17/2011 at 09:44 AM.
  9.    #9  
    After thinking about what this might mean for webOS my take is:

    they will invest in the TouchPad as a hardware vehicle and flagship webOS product for the increased investment in connectivity and tie to application services.

    I'm unclear about the phones. My guess is this means 3.0 will be coming sooner to the phones than we thought so that the connectivity story hangs tighter.

    Phones sit in the midst of consumer and enterprise and certainly consumer phone market is highly competitive so that might suggest less investment here. On the other hand, phones and consumer buy are still the vehicles by which the webOS and other operating systems gain visibility and penetration into the enterprise--this would suggest the phones would be supported with advertising.

    We'll have to see.
  10. #10  
    Good time to enter HP stock =b
  11.    #11  
    from WSJ
    Hewlett-Packard Cuts Outlook for Year

    Hewlett-Packard Co. reduced its 2011 outlook and warned of weaker results in its current quarter in a hastily arranged earnings call Tuesday, a day after an email from its chief executive warning of tough times became public.

    News of the memo and the revised outlook sent H-P's shares down 9% in early trading on the New York Stock Exchange. The company's shares recently lost $3.57 to $36.23.

    In an interview, H-P Chief Executive Leo Apotheker said investors were overlooking a strong fiscal second quarter by the company. "We performed really well," he said.

    H-P said its profit for the quarter increased 5% and revenue rose 3% in the quarter ending April 30, with profit exceeding and revenue in line with the company's earlier projections.

    The pessimistic outlook is a result of changes the Palo Alto, Calif., company is making in its services business and poor demand for personal computers among consumers. The earthquake in Japan has also reduced demand for H-P's products there and increased logistics costs, as the company needs to find alternate suppliers and ship more by air, the company said.

    Mr. Apotheker said weak PC sales to consumers is a industry-wide problem due in part to the rise of tablet devices such as Apple Inc.'s iPad. H-P will soon release its own tablet, dubbed the TouchPad.

    H-P is in the midst of retooling its services business to better focus on high-margin projects such as software development, but the company doesn't yet have the personnel it needs in place, the CEO said. Mr. Apotheker blamed his predecessor, Mark Hurd, for this shortcoming: "We talked strategy, we just failed to execute in the past," he said.

    The company is currently looking for an executive vice president to oversee the services business.

    Mr. Apotheker stood by the company's long-term earnings guidance of $7 per share in 2014 and sought to calm shareholders who have been selling the company's stock. "I want to reassure our investors, our genuine investors, that H-P has a very good investment thesis," he said in the interview...
    H-P is in for "another tough quarter," Mr. Apotheker wrote in the email, a copy of which was reviewed by The Wall Street Journal. "We must watch every penny and minimize all hiring," adding that H-P has "absolutely no room for profitless revenue or any discretionary expenditures."

    "I don't think it was harsh language at all," Mr. Apotheker said in the interview, noting that it was a private communication with his staff...
    In a call with analysts, Mr. Apotheker, who took over in November after Mr. Hurd resigned in August, added that it's likely going to take a couple of quarters to get the services unit to focus on more profitable contracts, including offering more products related to cloud computing, which allows users to run programs and store information remotely.

    Hewlett-Packard Cuts Outlook for Year -
  12.    #12  
    "...The company is on track to launch its TouchPad tablet PC "this summer," Apotheker said, insisting that it's important that the company continue to produce a full range of products, from phones, tablets and laptops all the way up to servers, to take advantage of a trend towards increasing connectivity between devices.

    "We see a world where technology is changing, and significant market opportunities are being created," he said.

    The services business is one area where HP needs to seize those opportunities. CFO Cathie Lesjak blamed the poor outlook in services on the company's current over-reliance on low-margin business process outsourcing.

    "We have not been ramping up our value-added application services business fast enough," she said, "We need to enhance our portfolio in higher-value businesses."

    HP is looking at investing in security and cloud management services as one way to increase profitability, and is also increasing the number of staff available to work on value-added services."

    HP Reports Revenue and Profit Up in Q2, but Lowers Forecasts

    Investment in those moves will, however, drag the service group's profitability down in the short term, Lesjak said...
  13.    #13  
    Stock down 9%.
    Everybody and their brother is lowering rating on the stock
    except for Goldman which is raising theirs, thinks the stock has corrected sufficiently.
    Paulsen bought $1 billion of HP stock back in (March? April?) for his restructuring and bankruptcy fund (which so far has lost money).
    Speaking of Paulsen, looks like there will be an HBO special docudrama next Mon night on "Too Big to Fail", William Hurt plays Paulsen.
  14. #14  
    Quote Originally Posted by UntidyGuy View Post
    In the email to his top executives, Apotheker wrote “We have absolutely no room for profitless revenue or any discretionary expenditures.”

    I think this is the key to anticipating what HP is going to be doing in the next few quarters. HP has a ton of profitable businesses. It also has some that are not profitable. At the top of the unprofitable list has got to be consumer tablets and smartphones. Just look at how people around here are constantly talking about what HP should be undercutting in price in order to gain marketshare for webOS - just about every device. This isn't the time that HP is going to be buying marketshare for webOS at the expense of profit.
    In a way, this reminds me a lot of what Steve Jobs did when he returned to Apple. He simplified their product line, focuses on Apple's core competencies and cut out fringe and unprofitable products like the Newton.

    I joke about HP watching Apple closely and coming up with stuff like the Envy and the TouchPad but this is one area where HP might really want to pay attention.
  15.    #15  
    I am beginning to believe HP leaked the memo to show Leo already taking steps to hold costs down in the lower margin arenas. And then he could say in the earnings call how he is ramping up in the higher margin arenas.
    And also start a new page with the introduction of the new webOS devices in the few weeks following the announcement.

    TouchPad is his enterprise trojan horse for webOS; the issue is that consumers are driving adoption in the enterprise from what I understand so HP has to play in the consumer arena. If they can get the consumer to buy ancillary stuff (music, movies, storage etc) plus more than one device for incremental marketing dollars and keep on sticking with the webOS ecosystem then I suppose the consumer biz can lift some margins as well as influence enterprise (similar to Apple model).

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