HPQ - Hewlett-Packard Company

[Myth465]

Perhaps but even Dell is paying rich multiples. I think its just the name of the game to make the transition. Either way its a tough game to handy cap. I have lost a fair share of cash on turnarounds, and I dont like the captains steering the ship. My brother works for HP, and it has always appeared driectionless. I just dont see that changing. They need a new board, not a new CEO.

[Parsad]

 

....They need a new board, not a new CEO.

 

Agree. But, how do you create a new board?

 

Activist or someone buys them.  I don't think there is any other way to do it.  Cheers!

[berkshiremystery]

Interesting article about HPQ and the so-called goodwill, which is the intangible asset that a company records when it pays a premium in a takeover.

 

Who Will Be the Next Hewlett-Packard?

Bloomberg - November 30, 2012

http://www.bloomberg.com/news/2012-11-29/who-will-be-the-next-hewlett-packard-.html?cmpid=yhoo.view

 

 

[alwaysinvert]

I have never seen an example of a courageuos or farsighted board. Perhaps this is in the nature of what they do, acting more as a failsafe. It may be that we only see when that failsafe doesn't do its job and that's why boards have such a bad reputation. I guess there is some truth to that. But more so I think that decisions by committee just plain suck. I always think of the biggest union leader here in Sweden, a real far-left pure socialist woman. She was on a couple of pension fund boards and signed off on egregious paychecks for directors for many years before it all made the news one day. She was dumbfounded explaining it. That's the nature of boards.

 

I mean even the BRK board, consisting of brilliant, brilliant people... I think it would take something absolutely extraordinary for them to second-guess Buffett on an issue. Maybe they would discuss issues and differ with him but if push came to shove and they were really, really sure that something devastating was going to be decided on, would they really contradict THE WARREN BUFFETT and fight tooth and nails for their viewpoint? I don't think so. There wouldn't be much to gain for them. In one of the scenarios they would be humiliated for being wrong and in the other they would risk falling out of favour with Buffett. The incentive structure is a nightmare for the common non-majority shareholder and in the end I think it's all down to the CEO and the rest of the top management being competent in the first place, because the board is such an impotent institution, really.

 

As for Meg Whitman et al, the jury still seems to be out, in my view. But I will be looking for small, small signs of serving the shareholder in the right way. And in this whole Autonomy saga I actually think there have been some indications in the proper direction as of late.

[rmitz]

I have never seen an example of a courageuos or farsighted board. Perhaps this is in the nature of what they do, acting more as a failsafe. It may be that we only see when that failsafe doesn't do its job and that's why boards have such a bad reputation. I guess there is some truth to that. But more so I think that decisions by committee just plain suck. I always think of the biggest union leader here in Sweden, a real far-left pure socialist woman. She was on a couple of pension fund boards and signed off on egregious paychecks for directors for many years before it all made the news one day. She was dumbfounded explaining it. That's the nature of boards.

 

I mean even the BRK board, consisting of brilliant, brilliant people... I think it would take something absolutely extraordinary for them to second-guess Buffett on an issue. Maybe they would discuss issues and differ with him but if push came to shove and they were really, really sure that something devastating was going to be decided on, would they really contradict THE WARREN BUFFETT and fight tooth and nails for their viewpoint? I don't think so. There wouldn't be much to gain for them. In one of the scenarios they would be humiliated for being wrong and in the other they would risk falling out of favour with Buffett. The incentive structure is a nightmare for the common non-majority shareholder and in the end I think it's all down to the CEO and the rest of the top management being competent in the first place, because the board is such an impotent institution, really.

 

As for Meg Whitman et al, the jury still seems to be out, in my view. But I will be looking for small, small signs of serving the shareholder in the right way. And in this whole Autonomy saga I actually think there have been some indications in the proper direction as of late.

 

Hmm, I take it you've been in the Berkshire board meetings?  How are they?  How do Buffett and Gates talk about things one-on-one?

[alwaysinvert]

I have never seen an example of a courageuos or farsighted board. Perhaps this is in the nature of what they do, acting more as a failsafe. It may be that we only see when that failsafe doesn't do its job and that's why boards have such a bad reputation. I guess there is some truth to that. But more so I think that decisions by committee just plain suck. I always think of the biggest union leader here in Sweden, a real far-left pure socialist woman. She was on a couple of pension fund boards and signed off on egregious paychecks for directors for many years before it all made the news one day. She was dumbfounded explaining it. That's the nature of boards.

 

I mean even the BRK board, consisting of brilliant, brilliant people... I think it would take something absolutely extraordinary for them to second-guess Buffett on an issue. Maybe they would discuss issues and differ with him but if push came to shove and they were really, really sure that something devastating was going to be decided on, would they really contradict THE WARREN BUFFETT and fight tooth and nails for their viewpoint? I don't think so. There wouldn't be much to gain for them. In one of the scenarios they would be humiliated for being wrong and in the other they would risk falling out of favour with Buffett. The incentive structure is a nightmare for the common non-majority shareholder and in the end I think it's all down to the CEO and the rest of the top management being competent in the first place, because the board is such an impotent institution, really.

 

As for Meg Whitman et al, the jury still seems to be out, in my view. But I will be looking for small, small signs of serving the shareholder in the right way. And in this whole Autonomy saga I actually think there have been some indications in the proper direction as of late.

 

Hmm, I take it you've been in the Berkshire board meetings?  How are they?  How do Buffett and Gates talk about things one-on-one?

There's no need for that tone. I think I made it quite clear that I'm just guessing. I think that the Berkshire board is probably better than most because it consists in large part of clearly strong-willed and independent people. Doesn't change the basic incentive structure, though. The point was not slagging off Berkshire but pointing to the obvious problems with how boards are set up. I actually think that, however intelligent all the individuals on the Berkshire board is, there might be a problem in that they have all been appointed by Buffett and are old pals of his, however honourable they are. Good friends aren't going to tell you that your sweater is ugly very often.

 

If Buffett suddenly and inexplicably decided to start destroying shareholder value, I think he could travel quite far down that road before hitting a roadblock. And that obviously goes for just about any company. I just read the book Barbarians at the gate and it was fascinating to see how Ross Johnson owned the board (for a long time at least) by knowing the game of reciprocity and just being good at joustling for more power. Seven corporate jets-good.

 

What I'm trying to say is that a 'good board' is pretty much immaterial to me. If it was obviously bad, like consisting of convicted criminals or something, it would be a red flag. But merely being passive? Don't care much. An alternative view to Myth's that is.

 

I just don't know what extreme difference a new HP board could make in and of itself, whereas what Whitman does can make a huge difference. In a universe where there is a board that does exactly what it's meant to do, sure, go ahead and change it. But I just don't think we are in that universe.

[Palantir]

I agree with alwaysinvert. I mean how many of us would question Buffett or any other superstar CEO's decisions? If Buffett invested in a Chinese microcap, we'd be ooohing and aaahing.

[Kraven]

I agree with alwaysinvert. I mean how many of us would question Buffett or any other superstar CEO's decisions? If Buffett invested in a Chinese microcap, we'd be ooohing and aaahing.

 

Those who have confidence in their own views and abilities?

[rjstc]

Watch the Charlie Rose interview with Buffett and Carol Loomis. It didn't sound like there was ever much debate about anything with him. She said just a few people would ever question him and he usually still went and did what he wanted. Not that's been bad in this case but that's pretty rare to find.

[Guest hellsten]

http://www.breakingviews.com/hp-breakup-is-on-tech-world%E2%80%99s-2013-agenda/21057090.article

 

Start with the company’s personal computing division, which had about $36 billion of revenue in the most recently reported 12 months. Rival Dell is valued at 24 percent of sales on the same basis. By that measure, the PC unit would be worth about $9 billion. The cash-generative printing division had about $25 billion of sales. At the same multiple of that as competitor Lexmark that business could also be worth about $9 billion. HP’s enterprise servers and storage business would fetch about $22 billion based on the value of peer NetApp.

 

The company’s services arm, including the Electronic Data Systems unit HP bought for $14 billion in 2008 before writing off most of its worth, may bring in some $17 billion if valued similarly to Computer Sciences. Finally, the software division, with a top line of about $4 billion, would be worth roughly $11 billion using the average multiple attached to similar enterprise software groups analyzed by JPMorgan. Add up all the pieces and net out HP’s $16.4 billion of net debt, and shareholders would potentially be left with assets worth over $50 billion, or just under $26 a share – 85 percent more than HP’s current share price.

[MrB]

My two cents...

The general perception of the role of the boardroom generally squares well with reality, but a chasm exist in the case of its limitations and track record between perception and reality.

 

Anyone that has been inside a boardroom, read a few books on an insiders view e.g. (Tony Griffiths - Lead director of Fairfax) http://www.amazon.com/gp/product/1118152867/ref=cm_cr_mts_prod_img

or have been invested in a company where you counted on the board to save the day will realise it is naive to count on the board to do just about anything. I cannot recall when was the last time I even bothered to look at the board of any company I invested in, but about a third of the weight of my decision is made up by management.

 

What? AIG without Ben/Hancock or BAC without Moynihan? I don't think I can name even one board member of any one of those companies. I think Hank Greenberg is on AIG's board...just kidding...well I suppose kind of. For those that follow AIG, think back on how many times Ben reported discussing AIG with Hank. He does so frequently. However, I cannot recall the last time he mentions speaking to Steve (Miller - I had to google for his last name), his chairman. Makes you think...doesn't it?

[Guest rimm_never_sleeps]

http://www.breakingviews.com/hp-breakup-is-on-tech-world%E2%80%99s-2013-agenda/21057090.article

 

Start with the company’s personal computing division, which had about $36 billion of revenue in the most recently reported 12 months. Rival Dell is valued at 24 percent of sales on the same basis. By that measure, the PC unit would be worth about $9 billion. The cash-generative printing division had about $25 billion of sales. At the same multiple of that as competitor Lexmark that business could also be worth about $9 billion. HP’s enterprise servers and storage business would fetch about $22 billion based on the value of peer NetApp.

 

The company’s services arm, including the Electronic Data Systems unit HP bought for $14 billion in 2008 before writing off most of its worth, may bring in some $17 billion if valued similarly to Computer Sciences. Finally, the software division, with a top line of about $4 billion, would be worth roughly $11 billion using the average multiple attached to similar enterprise software groups analyzed by JPMorgan. Add up all the pieces and net out HP’s $16.4 billion of net debt, and shareholders would potentially be left with assets worth over $50 billion, or just under $26 a share – 85 percent more than HP’s current share price.

 

hp is a silicon valley ICON even though it shouldn't be. but the board believes it still is. You don't break that up. Meg wants to run a big co! not some dinky little thing that won't get her to Davos. Often the best thing for shareholders is not the best thing for management or the BOD. It makes no sense to keep HPQ together. But that's what the plan is. This is why "activists" don't like to agitate at Big Co. with not enough shares to scare them, they don't have very much influence. Let's see if Relational can get anything done.

[BargainValueHunter]

http://www.streetinsider.com/Analyst+Comments/Analyst+Says+HP+%28HPQ%29+Could+Be+Worth+88%25+More/7997548.html

 

Hewlett-Packard Company (NYSE: HPQ) is higher early Wednesday as a noted analyst see significant value in the beaten up name based on a 'sum-of-the-parts' basis.

 

Bernstein analyst Toni Sacconaghi sees a value of $29/share for HP, which suggests 88% upside from Tuesday's close. This compares to a $12/share 'sum-of-the-parts' for Dell (Nasdaq: DELL), suggesting just 11% upside.

 

Not too many bargains left in this market. Value investors need a correction.

[Sportgamma]

http://andrewgelman.com/movabletype/mlm/BloodInk.jpg

[cayale]

That graphic is hilarious.  Any mixologists on board care to comment on how HP Ink tastes in your martini (relative to vodka, and for the resident vampires, human blood)?

[Gilp]

http://andrewgelman.com/movabletype/mlm/BloodInk.jpg

 

Looks super interesting,  what is the source?

[Sportgamma]

 

 

Looks super interesting,  what is the source?

 

http://andrewgelman.com/movabletype/mlm/BloodInk.jpg

[Phaceliacapital]

--  First quarter non-GAAP diluted earnings per share of $0.82, down 11%

    from the prior year, above previously provided outlook of $0.68 to

    $0.71

--  First quarter GAAP diluted earnings per share of $0.63, down 14% from

    the prior year, above previously provided outlook of $0.34 to $0.37

    per share

--  First quarter net revenue of $28.4 billion, down 6% year over year and

    down 4% when adjusted for the effects of currency

--  Cash flow from operations of $2.6 billion, up 115% from the prior year

--  Returned $511 million in cash to shareholders in the form of dividends

    and share repurchases

--  Improved company net debt position for the fourth consecutive quarter

    by over $1 billion

[fareastwarriors]

HP Faces Mounting Pressure to Remove Chairman Ray Lane

 

 

Hewlett-Packard Co. (HPQ) faces mounting pressure to remove Chairman Ray Lane and several other board members after proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. urged investors to block their re- election over failures to properly vet acquisitions.

Shareholders should vote against Lane, John Hammergren, and G. Kennedy Thompson, ISS said in a report released in advance of the company’s annual meeting, set for March 20. Glass Lewis urged the removal of Hammergren, Thompson, Marc Andreessen and Rajiv Gupta, the lead independent director.

 

Both proxy advisers faulted Lane’s board for an $8.8 billion writedown in November related to the purchase of Autonomy Corp. after Hewlett-Packard discovered “serious accounting improprieties.” The revelation followed an August announcement that the Palo Alto, California-based company would take a charge of $9.2 billion, largely tied to its purchase of Electronic Data Systems Corp.

 

“The company recorded $18 billion in write-downs during fiscal 2012, amounting to approximately 54 percent of the company’s market value,” ISS said. “These unusually high write-downs, in particular the Autonomy write-down, stem from ill-advised acquisitions, strategic failures, and poor deployment of shareholders’ capital.”

Lane and his colleagues on the board should have exercised stronger oversight before the $10.3 billion Autonomy purchase, ISS and Glass Lewis said. Rebukes by the proxy advisers follow a push last month by CtW Investment Group, part of the labor organization Change to Win, for Hewlett-Packard to remove Lane, Hammergren and Thompson from the board and to drop Ernst & Young LLP as its auditor, though the group later rescinded its call for Lane to step down.

 

‘Failed Acquisitions’

 

Glass Lewis said “the mishaps of the past several years,” including executive changes and failed acquisitions, “have continued to weigh on the company’s progress.”

Meg Whitman, Hewlett-Packard’s fourth chief executive officer in three years, is attempting to revive growth and win back investor confidence after six quarters of declining sales and profit and management missteps. The last board shakeup was in 2011, when four directors were ousted to quell criticism over the way it handled the departure of former CEO Mark Hurd.

 

“HP’s challenges with multiple CEO turnovers over the last three years, the back-and-forth in the decision to spin-off or sell its PC business, and announcement of the goodwill impairment charges related to the EDS and Autonomy transactions likely exacerbated the decline in the company’s stock price,” ISS said.

Independent Auditor

Glass Lewis also urged shareholders to remove Ernst & Young as Hewlett-Packard’s independent auditor, while ISS supported retention of the accounting firm.

 

Lane, 66, joined as nonexecutive chairman in 2010 with the appointment of former CEO Leo Apotheker, and became executive chairman the following year when Whitman was hired as CEO following the ouster of her predecessor. ISS and Glass Lewis both urged shareholders to vote against executive compensation that they said didn’t hold top leaders accountable for poorly executed acquisitions.

 

Hammergren, chairman of the board’s finance committee, has been a director since 2005 and is also chief executive officer at McKesson Corp. (MCK) Thompson, a director since 2006, heads the audit committee. Andreessen, co-founder of venture-capital firm Andreessen Horowitz, joined the board in 2009. Gupta, on the board since 2009, became lead independent director in 2011.

 

“The Board fully supports the election of each of the director nominees named in the proxy statement,” Howard Clabo, a spokesman for Hewlett-Packard, said in a statement.

Hewlett-Packard shares have declined 19 percent in the past year, compared with a 13 percent gain for the Standard & Poor’s 500 Index. The stock rose 2 percent to $20.37 at the close in New York.

 

 

 

http://www.bloomberg.com/news/2013-03-05/hp-chairman-lane-among-directors-opposed-by-iss.html

[fareastwarriors]

http://www.idc.com/getdoc.jsp?containerId=prUS24213513

 

Lenovo Overtakes HP as the Top PC Vendor While U.S. Shipments Stabilize in the Second Quarter of 2013, According to IDC

 

 

[fareastwarriors]

H-P's Friends in Unlikely Places

 

http://online.wsj.com/article/SB10001424127887323997004578642073897085756.html?mod=WSJ_business_MoreArticles

 

Weaker Yen Plus Deal Delays at Dell and IBM Relieve Pressure on H-P.

[fareastwarriors]

http://www.nytimes.com/2013/08/22/technology/hewlett-packard-sales-drop-as-pc-demand-wanes.html?ref=business

 

 

Hewlett-Packard Sales Drop as PC Demand Wanes

[bmichaud]

http://www.cnbc.com/id/100979531

 

Back in the market for acquisitions....wow.

[Palantir]

No one's following this anymore huh. Nevertheless, this firm doesn't look like the disaster it did a year ago, has a profitable business, already taken its writedowns, and is trading at a 15% FCF Yield. Don't have anything insightful to add yet.

 

While a lot of news focuses on PC declines, it seems that the Personal Systems segment, while large in terms of revenue, doesn't really contribute that much in profit, and it is possible that by the end of next year, they will earn more in software than they will in PCs.

[fareastwarriors]

http://www.bloomberg.com/news/2013-11-26/hewlett-packard-fourth-quarter-sales-top-estimates.html

 

 

Hewlett-Packard Fourth Quarter Sales Top Estimates