[Info-vax] HP to axe 30,000 jobs to cut costs

[Neil Rieck]

On May 26, 1:56 am, JF Mezei <jfmezei.spam... at vaxination.ca> wrote:
> This past week, the speculation on job cuts was clarified by HP:
>
> HP Launches Multi-year Restructuring to Fuel Innovation and Enable
> Investmenthttp://www8.hp.com/us/en/hp-news/press-release.html?id=1247078#.T8BnC...
>
> As part of the restructuring, HP expects approximately 27,000 employees
> to exit the company, or 8.0% of its workforce as of Oct. 31, 2011, by
> the end of fiscal year 2014.
>
> HP will invest in research and development to drive innovation and
> differentiation across its core printing and personal systems
> businesses, as well as emerging areas. It will also invest in marketing,
> sales productivity and tools that simplify the customer experience and
> make it easier to do business with HP.
>
> Enterprise Servers, Storage and Networking will invest to accelerate its
> research and development activities to extend its leading portfolio of
> servers, storage and networking. Together these assets create a
> Converged Infrastructure which is the foundation for top client
> initiatives such as cloud, virtualization, big data analytics, legacy
> modernization and social media.
>
> And from the financiual quarter release:
>
> Enterprise Servers, Storage and Networking (ESSN) revenue declined 6%
>    year over year with an 11.2% operating margin. Networking revenue was
>     up 2%, Industry Standard Servers revenue was down 6%, Business
>     Critical Systems revenue was down 23%, and Storage revenue was up 1%
>     year over year.
>
> Yep BCS down 23%
>
> Not related to VMS, but interesting:
>
> In May 2012, HP committed to a change in its PC branding strategy. As a
> result, HP has commenced an asset impairment analysis to determine the
> current value of the Compaq trade name acquired in 2002.
>
>                 Net revenue     Earnings before taxes: (millions)
> PCs:            18,325          988
> Services:       17,457          1,902
> Printing:       12,390          1,569
> ESSN:           10,229          1,147
> etc
>
> So the enterprise storage servers and networking still delivers more
> profit than PCs although it gets only 55% of net revenues.
>
> Breaking down ESSN net revenues:
>
> Industry Standard Servers:      3186
> Storage                         990
> Business Critical Systems:      421
> Networking:                     614
>
> From the transcript document:
> Within BCS, our mission critical x86 grew double digits, but BCS
> performance continued to be impacted by Itanium revenue declines
>
> In the webcast though, Whitman says "impacted by th Oracle/Itanium issue".
>
> From the webcast of the financial analyst teleconference:http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-EventDetails&E...
>
> "Business critical systems, not surprisingly, still facing challenges
> from the Oracle Itanium issue, but more important is how we're moving
> forward. Our Odyssey solution is an innovative mission-critical x86
> platform that will offer customers a transition to open standards-based
> architectures."
>
> Interesting, newly acquired Autonomy has seen revenue decline following
> acquisition from HP. (HP is kicking out the founder and replacing with
> its own staff).
>
> In the questions and asnwers:
> ##
> Even in industry standard servers, which people say to me all the time,
> isn't that a commodity business? Not if we can help it, it shouldn't be.
> Look at our next-generation Gen 8 ProLiant servers.Look at Moonshot,look
> at Odyssey.These are things that redefine that category,and that's the
> thing that we want to invest in.
> ##
>
> Moonshot is the very low energy consumption servers. Odyssey is the
> Superdome class based on x86 (glorified blade servers).

When it comes to comparing businesses, I know next to nothing. What is
worse, I often try to compare similar businesses which are in slightly
different markets (but know-nothing MBAs are guilty of the same
mistake so I will continue). Using google finance to get market caps,
and wikipedia to get employee numbers, here is what I came up with:

HPQ $44B 350k
Oracle $130B 111k
Microsoft $244B 92k
Apple $525B 60k
---------------------------
IBM $224B 433k

The 10,000 foot view (from the HPQ board room) of the first four
(cherry picked) items indicate that fewer employees translate into
larger market cap. Now we all know that HPQ took on its largest number
of employees when it acquired EDS. Unlike Apple, HP's primary business
is "human-based computer services" so getting rid of people will hurt
that business unless they can develop some wiz-bang technology to
provide "computer services" with fewer people.  But the IBM numbers
are proof that lowering employee numbers (unless the employees being
purged were doing nothing) is a big mistake.

So is HP comparing itself to Oracle, Microsoft, and Apple, or are they
comparing themselves to IBM?

http://www.google.com/finance?q=NYSE%3AHPQ

NSR