He’d also been heavily recruited. Sources familiar with the situation told me that Swainson had been in line for a very senior and nearly identical job at Hewlett-Packard. Swainson didn’t return my call seeking comment, and spokesmen for HP and Dell declined to comment, as well.

Dell is launching the Software Group, it said in a statement, to build out its muscle on the software side as a complement to its overall mission of selling IT services.

And there’s probably no one better to do it than Swainson. Since 2009 he’s been an adviser at private equity firm Silver Lake Partners. But from 2004 to 2009 he ran CA with one single goal in mind: Rebuilding its reputation following an accounting scandal that ended when its prior CEO, Sanjay Kumar, was sentenced to 12 years in prison. The company paid $225 million to settle federal charges brought by the Securities and Exchange Commission and the Department of Justice.

But before CA, Swainson had spent 26 years at IBM. Among the things he did at Big Blue was spend seven years as general manager of its Application Integration Middleware division, which was a business he created. It was during those years that IBM launched its WebSphere family of products.

So that leaves just one question: Who’s going to run the HP software division that it had wanted Swainson to run?

… think of these small mobile devices as creating the next wave of users who will want larger-screen devices.

– Dell CEO Michael Dell

Aneel Bhusri

Allen is said to have advised Workday on its recent funding round, which closed in October. As exclusively reported by AllThingsD at the time, Workday raised $85 million at an implied valuation of $2 billion. The Series F was led by T. Rowe Price, Morgan Stanley Investment Management, Janus and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos. Bloomberg also says that Michael Dell’s personal investment vehicle, MSD ventures, was in on that funding round, which grew to $100 million since the closing.

Previous investors include Dave Duffield and Greylock Partners, who are in for $90 million across four rounds; and New Enterprise Associates, which joined a $75 million Series E round in 2009.

Apparently encouraged by the successful IPO of Jive Software earlier this month, and the performance of its shares, which are up nicely since the debut, Workday now appears poised go through with the IPO that CEO Aneel Bhusri (pictured) hinted in October would take place during the second half of 2012.

And there’s no question that Workday is in a hot space. SAP’s $3.4 billion acquisition of SuccessFactors last month, plus Salesforce.com’s deal for Rypple last week, attest to the urgency with which larger companies want to be in the HR software business.

Think about it: Every company — of any size — needs to keep track of its people, their salaries, performance-review information and so on. And why bother with software that runs on the local machines, when the cloud is so much more efficient?

Bhusri was a senior executive and co-chairman of PeopleSoft’s board, and was on hand for that company’s hostile takeover by Oracle. After losing that battle, he and co-founder Dave Duffield concluded that the next battlefield for enterprise software would be in the cloud.

Workday’s average customer has between 10,000 and 15,000 employees. Among its 250-odd customers, the biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Others include Time Warner, Thomson Reuters, Chiquita Brands and, perhaps unsurprisingly, Salesforce.com. Workday has some two million employees in its system.

And while there’s no S-1 filing with the US Securities and Exchange Commission to peruse yet, the IPO watch on Workday officially begins now.

While it never had a big footprint on the floor of the show itself, for the past three years it has hosted media and showgoers in the Dell Suites — an entire floor of The Palms Casino Resort tricked out with the latest in Dell hardware. This year, however, the company is approaching CES with a bit more restraint.

It won’t be commandeering the The Palms’ Hardwood Suite to create a “smart living space.” Instead, sources say, Dell is opting for moderation, taking meetings in hotel suites and CES conference rooms and perhaps piggybacking on the keynote of one of its partners for a big product announcement (ultrabooks, anyone?).

So the company will still have some visibility at the event, just not the sort of high-profile, conspicuous-consumption-style visibility it has had in years past.

Why the shift? That’s not clear. Dell has had a very spotty record in the consumer gadget market dating back to its Axim handhelds and DJ music players. That has continued to its recent forays into smartphones and tablets. And the company’s attention has been leaning heavily toward the enterprise of late, which makes CES a markedly less useful event for it.

Indeed, speaking at the Credit Suisse conference today, Steve Felice, Dell’s president for Consumer, Small and Medium Business, said the company was looking to “prune” products to focus on more profitable areas. That message echoes comments made during Dell’s last earnings call when the company said consumer sales in the U.S. and Western Europe recently had led it to step away from “low-value” PC opportunities to focus more on servers, services and networking equipment (with a 6 percent drop in consumer revenue in the third quarter, that seems like a reasonable move). This undoubtedly factored in to the company’s decision to scale back at CES.

Dell Suites at CES 2011

Another theory: The Dell Suites concept has outlived its usefulness now that the company has Dell World, the customer-focused conference it inaugurated this year and plans to hold again in 2012. Why pay good money to deliver your message in the free-for-all, look-at-me shouting match that is CES when you can create your own platform from which to deliver it when people aren’t tired of listening?

Reached for comment, Dell confirmed that it is indeed dialing back its presence at CES and that it will be introducing a new product during a partner keynote, though it declined to specify which one.

“Over the last few months, we’ve been evaluating the most effective platforms that allow us to reach and engage our core consumers directly,” the company said in a statement provided to AllThingsD. “We will continue to have a presence at CES 2012, meeting with key retail customers, partners, investors, press and analysts, among others. In addition, we will be joining a key partner in their keynote presentation and we will be introducing a new product at the show. As we look ahead to calendar year 2012, we will be focused on engaging our various stakeholders through uniquely Dell experiences, such as the recently concluded Dell World and other Dell-specific events.”

Reached for comment, the Consumer Electronics Association, which produces CES, said Dell has not yet told them of its intentions for CES 2012.

(Image Credit: Dell Flickr page)

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The country is now beginning the arduous job of cleaning up from the floods that killed upwards of 600 people and dealt a body blow to its industrial and manufacturing base.

One industry hit especially hard is the computer business. The world relies on factories in Thailand to turn out critical components used to build hard drives, and factories there are out of commission for now. This is not a trivial problem — the factories in question are not easy to replace, retool and restart once they dry out. Nor is the answer simply for the hard drive manufacturers to build new factories somewhere outside the flood zone.

This is the kind of supply chain disruption that the computer industry hasn’t seen in many years. I had a chance to talk with Steve Luczo, the CEO of Seagate Technology, for his view of the situation. Seagate has been relatively lucky in that its factories haven’t been directly impacted like those of Western Digital and Toshiba. But many companies that supply Seagate with necessary components have been hit, and it will be some time before they’re back on their feet.

Luczo told me that the computer industry as a whole — including companies who make PCs, servers, workstations and any other device that contains a hard drive, whether a set-top box or an enterprise storage device — can expect acute supply-chain disruptions to last well into 2012, and that it will take until the end of 2013 for the industry to return to its pre-flood operating posture. You read that right: It will be two years before the supply of hard drives is anywhere near “back to normal,” and there are simply no easy solutions for getting it fixed.

An estimate by the market research firm IHS iSuppli pegs the available supply at 125 million units, which is about 29 percent short of demand of 175 million units. By its reckoning, more than one-quarter of the world’s hard drive manufacturing capacity has been disrupted in one way or another, including 45 percent of the capacity devoted to making hard drives for personal computers. I spoke with Luczo by phone yesterday, and tossed in an extra eighth question because of the importance of the subject.

AllThingsD: Steve, at a high level, I think everyone understands the problem. There’s been a terrible flood in Thailand, and a lot of factories that make crucial parts for hard drives are out of commission. To that end, I think people expect this to be a temporary problem that works itself out in a couple of months. But you say it’s a much more complex problem than most people realize. You’re tracking this situation day to day, and probably hour by hour. So, how bad is it, really? And what’s likely to happen?

Luczo: What’s surprising to us is that even with all the data out there — we’re six weeks into it — there are a lot of fairly sophisticated companies that haven’t fully come to grips with the depth of the problem and the duration that is likely to occur. What is going to happen in the next couple of weeks is that the real shortage begins to show up right about now. There was already a lot of built inventory and a lot of finished goods moving through the system. And now all that is gone, and I think customers are starting to see shelves of parts go empty, and realizing that they’re not going to be filled for anywhere from one to two months. So the concern is heightened.

We heard Meg Whitman talk about this on HP’s earnings call Monday. She said HP stepped in and started doing some strategic buying. She says HP is going to see effects at least through the first half of next year. Apple talked about it on its earnings conference call, too. Are you hearing from them?

Tim Cook at Apple was way in front of this. I saw Tim the first week it happened, and took him through the situation, and in 15 minutes he understood the magnitude of it. Meg was on the second week of her job as CEO when I went to see her, and she got it right away. HP’s procurement VP, Tony Prophet, was also early to understand this. Companies like that reached out to us early on, because they understood that this is going to be an extended problem. They started asking for longer supply agreements. Deals that would typically last about a year, they’re now asking for two years.

How bad is it really going to be? What’s your outlier worst-case scenario, and then what do you think is a little more realistic?

If you think pre-flood, a mix [of products] that the customers need, the industry had the capacity to ship about 190 million units a quarter. Pre-flood, we expected the demand to be pretty consistent at about 180 million a quarter, with a bump in September 2012 for Windows 8. We now believe the March quarter is going to much more difficult than the December quarter, and December is going to be about 120 million or so. We think the March quarter will be about 120 million, in the best-case scenario. And that’s with customers mixing down pretty aggressively; and by that, I mean companies like Western Digital, who don’t have access to the sliders [a critical component in a drive], are shipping one- and two-headed devices so they can ship more units. So instead of shipping a drive that contains two disks and four heads, which is what the market needs right now, they’ll be shipping a one-disk, one-head or one-desk, two-head product. They’ll be maximizing the units they can sell, rather than shipping the product the customer actually needs. … So we see something like 130 million for March on the optimistic side, and then 150 million for June, 170 for September and then 190 million for December. And so by the end of 2012 you’re back to being close to industry demand. But even then, you’ve not included the impact of that missed 100 million units. And that will take another year to absorb, because it’s not like the industry is building new factories to chase that demand. We can’t over-invest to meet some bubble and then get stuck with excess capacity.

I think, intuitively, people expected companies like Seagate to just build more factories outside of the flood zone, but it’s not that simple, is it? Would this not be a moment to add capacity?

There are some in the investment community who think that’s what is going to happen, and that there will end up being a supply glut after all this is over, but it’s not the case. For us, it’s more a function of how to recover the supply chain and then work with the customer to get a good read on what their needs are for the next several quarters. If we see a multiquarter shortage that goes beyond what I described before, then we would think about maybe putting some capital in place. But we’re not going to do that to solve a temporary problem, because we end up being stuck with the excess capacity. Now if it turns out there is no recovery, and then the industry is more constrained than I first described — and that, by June, the industry is still 30-40 million units short and looks like it will be for the next six quarters — we might revisit. But then we’d want longer-term commitments to make sure we’re not overinvesting. But we’re not to that point yet.

What is this doing to prices? And what does that mean to the person who wants to buy a computer or server this year or next year?

If you look at a 10-year moving average trend, the industry has in general seen prices come down about 2 to 3 percent a quarter, and that is for a particular product. In 2009, there was a little price erosion, and that was because the storage industry recovered quickly from the recession. And there had been massive capital cutbacks, so there were big shortfalls through all of 2009 and into 2010. Then, when the Greece crisis happened, that put a big flatline on a lot of growth, and the industry had put in a lot of capital because everyone expected there would be growth. So, since spring of 2010, the price erosion has been higher than normal, which would show that supply is greater than demand. And what this flood has done is drive the supply curve down, while the demand curve has stayed constant. For OEMs [original equipment manufacturers, or the PC and server manufacturers like Apple, HP and Dell, who buy directly from Seagate], you’re seeing an average increase of about 20 percent, and in the channel [resellers who sell parts to smaller PC and server vendors], probably much higher. So all the sensational quotes you see about pricing are about those that occur in the channel, where we have no control whatsoever.

The markups in the channel are much higher? Are the channel guys taking advantage of this?

Yes, they’re higher, but I don’t think they’re taking advantage. I’ve heard stories about drives that we sell to OEMs for $60 that show up in the channel at $105. Normally the channel price is within about 10 percent of the OEM price. It’s just the law of supply and demand. They can’t get supply. The channel is getting about a third, at most, of the supply they would typically get. The OEMs are the ones with the supply agreements, so everyone in the channel is way short. In some market segments, supply is about 70 percent below what the demand is. And so those shortages are very acute. The channel is selling the few drives that are out there to whoever needs them the most and is willing to pay for them.

So what does all this mean for Seagate, specifically?

For us it’s a different story, because we’re going to be driving more volume than our competitors, because we’re not as directly affected, and we’re going to be making some  technology transitions. When we do that, it lets us take cost out of our product, so we can offer more capacity for the same or fewer parts. That helps us drive down pricing. Our goal is to recapture some of the more aggressive pricing of the last eight quarters, in order to sort of get our business back in balance. Our long-term business model calls for gross margins of 22 to 26 percent. And we use our manufacturing expertise to drive down our costs and then pass that on to our customers. This quarter, end users really won’t see it, because product has been built and has been on the shelves. As the shortages just started occurring, you’re starting to see prices increase in the channel. And then at the OEM there will be shortages in some high-value areas like enterprise storage or cloud computing. You’re going to have to see price increases, because there’s such big shortages.

One thing that occurred to me when I first wrote about this a month or so ago is that it represents an opportunity for the flash memory chip companies to make some inroads against hard-drive guys like you, mainly on notebooks. Is there a threat that flash could pick up some of the demand?

Some of it, but not very much. I think to the extent that there is a high value purchaser who can afford to pay $200 for 100 gigabytes, then that market will expand from 1-2 percent to 3-4 percent. Of the 35 to 40 percent shortage that exists, could you see a little of that get absorbed by silicon? The answer is yes. But there’s a cap. There’s just not enough of a raw supply of silicon to meet all the demand. Our industry will ship 400 exabytes this year. We would have shipped 450, were it not for the floods. Of that, 180 exabytes is notebooks. Reduce that by 30 percent, and you get about 55 or 60 exabytes. If you were to take all of the capacity from Samsung’s newest state-of-the-art flash factory, and dedicated it just to notebooks, it would only put out 7 exabytes a year. Plus, there are already other markets demanding flash, like  tablets and cellphones and other things. So it’s not like you can steal from those other markets. You’re not going to take a $32 product and replace it with a $350 product. Can you do it at the edges of the market? Sure. But the threat is capped by the amount of silicon available and the price point for flash storage, which is still an order of magnitude higher.

The company’s troubles aren’t anything you couldn’t intuitively guess: Consumer PC sales are weak for a variety of reasons, ranging from the popularity of tablets like the iPad to a frail consumer economy, combined with slumping sales to state and local governments facing squeezed budgets. Dell’s strengths: Sales of PCs and servers to enterprises and the federal government.

Even with weaker sales, that mix should allow Dell’s profits to hold up. Whitmore writes in a note to clients: “We expect solid margins due to favorable product mix — healthy corporate demand and softer consumer demand — benign commodity prices and greater contribution from Dell’s higher margin Storage and Server offerings.” Memory chip prices are down by 17 percent and LCD display prices are down 3 percent, giving Dell a little wind at its back from a cost perspective, and possibly offsetting the expected impact from a shortage of hard drives caused by the flooding in Thailand.

Whitmore expects Dell to report sales of $15.6 billion and margins of 22.2 percent, and an operating margin of 7.2 percent, implying per-share profits of 44 cents. Whitmore’s estimates are slightly below the consensus view of analysts’ calls for Dell to report earnings per share of 47 cents on sales of $15.7 billion.

Looking ahead, Whitmore expects Dell to emphasize an ongoing cycle of upgrades to corporate PCs and servers. He expects estimates for the 2012 fiscal year could improve, because right now they “appear conservative.”

There are a billion and a half PCs in the world and while Gartner change their estimates here and there, they also estimate there will be two billion PCs in the world by 2014. So when I look at that, I think the idea that the PC is no longer here is complete nonsense.

Michael Dell, in a video interview on FT.com

Dell shares are down by $1.59 to $14.21, representing a drop of more than nearly 10.2 percent as of 9:40 am San Francisco time, amid heavier than usual trading volume.

The company has been seeking to reduce its exposure to the more fickle markets for consumer PCs and other devices and investing more aggressively in building up its enterprise IT offerings, says Brent Bracelin, an analyst with Pacific Crest Securities, in a note to clients today. Dell’s exposure now accounts for less than 5 percent of operating profits, he wrote.

To that end, one small bright spot came in the enterprise business. While sales of notebooks fell short of expectations by $200 million, dropping to the lowest growth rate in almost two years, these results were offset in part, Bracelin says, by stronger growth in the server and storage business. This helped boost per-share earnings to 54 cents, which beat the consensus by five cents, despite the fact that sales fell short of expectations by $100 million. Dell also reduced its sales forecasts for the full year.

The shift toward the enterprise has helped Dell shares to rise by 17 percent so far this year, beating the Nasdaq, which has fallen about 5 percent. “Most of the gains can be attributed to four consecutive quarters of greater than 50 percent operating profit growth driven by an enterprise IT spending recovery that was accentuated by Dell’s transformation in adding higher-value enterprise products and services,” Bracelin wrote.

But all good things must come to an end. Contracting IT budgets and the larger economy are delivering a one-two punch to Dell’s prospects. Bracelin wrote that it could be a year before Dell’s growth starts to accelerate again.

While Dell’s per-share earnings were 54 cents, about five cents ahead of the consensus, sales were $15.66 billion, a full $100 million shy of what analysts expected. Worse, Dell said it expects revenue in the third quarter to be “roughly flat” relative to the second quarter, which it said would be consistent with typical seasonal patterns seen over the last two years.

There’s more: Dell slashed its sales growth outlook for the year. It said it now expects revenue to grow in a range of one to five percent, down from its previous range of five to nine percent.

CEO Michael Dell tried to reassure investors of an eventual turnaround in a statement: “We continue to see great momentum in the high-growth areas of our business, which is a direct reflection of the discipline and strong execution our global Dell team is applying to help solve real-world challenges for our customers. We’re creating efficiency across every step of the IT value chain and ultimately enabling all customers — from home users to large businesses and government organizations — to achieve the outcomes that matter most to them.”

It wasn’t enough to calm skittish investors: Dell shares initially fell as much as six percent on the news, and are as of 1:25 pm Pacific Time trading down 4.2 percent, or 64 cents.

A recent IBM poll of 1,500 CEOs identified “creativity” as the top leadership skill needed in the future. But being creative doesn’t just happen. It’s one of those intangible qualities that people simply have or do not. Yet if you could make it tangible — put it in a bottle and sell it — you’d strike it rich. Clearly, there’s something that innovative companies and people have that the less innovative ones lack. Just what the heck is it?

That’s the question that business professors Jeff Dyer and Hal Gregersen set out to answer by teaming up with famous innovation guru Clay Christensen. Nearly 15 years ago, Christensen coined the phrase “disruptive innovation,” and wrote two best-selling books on the subject. The Innovator’s Dilemma and The Innovator’s Solution both examined disruptive technologies, business models and companies.

The Innovator’s DNA, co-authored by all three, makes it a trilogy. In it, they seek to answer the most basic questions about innovation: What makes an innovative company, and what companies can do to become more innovative.

Gregersen is a professor of leadership at INSEAD, the international graduate business school. Dyer, who I spoke with recently, is the Horace Beesley Professor of Strategy in the Marriott School of Management at Brigham Young University. I started by asking him how the idea for the book came about.

AllThingsD: What’s the book about and how did it happen?

Dyer: The book is really the product of a conversation I had with Hal Gregersen and Clayton Christensen. And the question we raised in that conversation was this: Where do disruptive business ideas come from in the first place? What are the origins of disruptive business? And [we wondered] if we could tell people something about where disruptive and innovative ideas come from that might be useful and helpful. One of the things we knew from research in psychology is that if you ask any crowd of people whether creativity is a genetic endowment or if it’s something that’s learned, 90 percent will say it’s genetic. We either have it or we don’t. But the way psychologists research this is they take identical twins — ideally who have been raised apart — and then, between ages 16 and 24, they will give them general intelligence tests. And what they find is that about 80 percent of performance seems to be genetically based. But then they give them creativity tests. There, only 20 to 40 percent of performance is genetically based. What that means is that creativity is much more learned than we think. Therefore the ability to generate innovative business ideas may come from things people learn and do, more than just because the people involved are who they are. For the book, we decided to go back and study business innovators and figure out, as best we could, the antecedents of people coming up with the ideas that they did, and what contributed to their ability to come up with innovative ideas.

And what sorts of things did you study?

One example we looked at was Steve Jobs at Apple. The story that everyone knows is the story of the graphical user interface and drop-down menus and the mouse. He, of course, didn’t originate an idea, but having seen it at Xerox, he returned to Apple laser-focused and determined to apply them to the Macintosh. He assembles a team of engineers and they create the first computer with a graphical user interface. But the idea was really born of an observation. He had seen something that he was able to take back and solve a problem. Another innovation of his was beautiful typography on the Mac and the LaserWriter printer. That came because he dropped out of college, and dropped in on a calligraphy class, and had no idea that it would ever have a practical application in his life. Ten years later, when he was working on the Macintosh, it all came back with the idea for a computer that could create beautiful typography. It was an important differentiation, and it occurred because of a time when he was out exploring. When we looked at the genesis of disruptive ideas, we found that the ideas occured when the innovator was asking a question, engaged in an observation, networked with someone who had a different point of view, or because they were experimenting.

Well, let’s talk about experimenting for a minute. There are lots of ways to experiment with things, and you discuss these in the book. What are they?

We have three ways of experimenting. Most of us think of it as just testing and piloting an idea, and that’s the classic method. But the second is taking apart a product or service or process or idea, and then putting them back together. That’s how Michael Dell came up with the idea for Dell Direct. The other is simply an exploration, where you’re learning a new skill like Jobs did in learning calligraphy — where you’re having a new experience that you can later draw upon. One of the innovators we talked to was a guy named Nate Alder. He came up with the idea for an argon vest. He was scuba diving in South America, and argon gas is used to keep you warm when you scuba dive. He was a snowboarding instructor at the time. He wondered if he could use the same argon to keep warm on cold days. So he came back and developed a line of products called Klymit jackets. And it happened because he was out exploring and trying something new.

So then the problem becomes this: If you’re a CEO or COO reading this book, how do you apply these ideas? I can send my team off for a retreat or something, but they’re not necessarily going to come back any more creative than they were. How do you encourage these behaviors at a company?

What we found is that at innovative companies, there’s a high correlation between the extent to which the leaders of the company engage in and display these discovery skills and the innovation performance of the company. It starts at the top. If you don’t do it, you’re not likely to imprint your behaviors on your organization as processes. What we saw was that when someone like Jeff Bezos is good at experimenting and questioning and coming up with new ideas, he then sets about creating processes within the company for doing experiments. Innovative companies are more likely to have processes that encourage questioning, observing, networking and experimenting. This is how it becomes more embedded in the organization’s culture.

How deep can the questioning go? You can look at Nokia, for example, which made rubber boots and toilet paper. And at some point, someone must have questioned the fundamental business plan that caused it to pivot to building electronics. That’s a pretty fundamental shift. If the questions can go that deep, is it always constructive?

In innovative companies, you find that that kind of question is always okay. And then we try to look at that question from a variety of angles to see if it warrants an answer. In companies that don’t innovate well, those kinds of questions aren’t considered or tolerated. If you don’t try to change the status quo, how are you ever going to innovate? That’s why it’s so important for the leaders to legitimize it, and to say that they want things that are new and different.

This is something you teach, so I wonder what you’ve learned from the process of sharing these ideas with other companies. The reason I ask is that there’s often a lot of entrenched resistance to change.

One of things I’ve done is courses where we teach with the case method — you give the students a case study on Sears or Kmart, and then ask them to come up with a new strategy to compete better with Wal-Mart. I gave one group the task and simply asked them to come up with a new strategy. I gave another group the same case and said that I wanted a new strategy, but that I also wanted it to be creative and innovative. I told them to push the boundaries. In third-party reviews, the groups where I legitimized being creative were all judged as having been more creative and original and likely to make a real difference than in the cases where I didn’t legitimize it.

You also ranked several companies for their ability to innovate. What companies are on your list? Number one and number two are Salesforce.com and Amazon, but I’m also interested in number three. Can you explain them?

We did rank several companies on their innovation prowess, using something we called an innovation premium. We interviewed [Salesforce CEO] Marc Benioff for the book. Salesforce has a founder who is really good at questioning the current model. He asked a fundamental question: In the age of the Internet, why are we installing software on individual computers? He just challenged that whole business model, and continues to try and challenge it now. And we all know about Amazon and Jeff Bezos. He loves to experiment and try new things, even if they’re weird. It’s gone from being the world’s biggest book retailer to the world’s biggest discount retailer to launching the Kindle, and now running Amazon Web Services. They just keep trying new things. Number three was Intuitive Surgical. They make the da Vinci system of surgical robots, and so they’re bringing robot-assisted surgery to the world. They innovated through tons and tons of observations of how surgeons do their work, and then creating robots that could mimic that, and that could be manipulated with tremendous precision.

The company also raised its quarterly dividend by a penny per share, or 20 percent, making this the third year in a row it has boosted its dividend. It said it doesn’t expect significant impact on its operations in Japan following the earthquake. There had been some concerns.

Oracle said it expects profit–excluding one-time expenses–will be in the 69- to 73-cent range this quarter, beating the 66-cent average estimate of analysts. Revenue is expected to grow year-on-year in the range of 9 to 13 percent, which works out to a range of between $10.4 billion and $10.7 billion.

The results were led by sales of new software licenses, a key measure of new business as opposed to sales to existing computers, which rose 29 percent to $2.2 billion. This handily beat the company’s guidance for growth in new licenses of 10 to 20 percent.

Software license updates rose 13 percent to $3.7 billion. Hardware sales were $1 billion, but since Oracle closed on its Sun acquisition during this quarter a year ago, a year-on-year comparison doesn’t apply.

The strong earnings report comes a day after Oracle launched a quarrel with hardware rival Hewlett-Packard and chipmaker Intel by saying it would no longer develop software that runs on systems using Intel’s Itanium Processor because it expects Intel is quietly planning to kill the chip. Intel denied the claim, saying two new versions of Itanium are in the pipeline, while HP, which sells most of the systems containing the chip, said it was “shocked.” Oracle stuck to its guns, saying it was only trying to help its customers plan accordingly.

Speaking of HP, with Oracle CEO Larry Ellison serving on jury duty, it fell to President Safra Catz to deliver this quarter’s obligatory dig at HP during a conference call with analysts.

With Oracle’s hardware business showing a healthy hardware margin–which is interesting in light of the fact that the results contain the hardware assets of Sun Microsystems–Catz reiterated a prior promise to deliver a $1.5 billion profit on the Sun business by the end of this fiscal year. That makes Sun a good purchase, she said, when compared to HP’s acquisition of 3Par, though time will tell if Oracle can deliver on the promised $2 billion profit in year two.

It’s probably not a fair comparison. Sun was trading at an extremely depressed valuation when Oracle stepped in. Only months before, Sun had been trading at the value of its cash holdings. 3Par, on the other hand, saw its valuation triple as the result of a punishing bidding war between HP and Dell. However Catz isn’t the first one to say HP paid too much. But as usual, any chance to tweak HP’s nose is fair game at Oracle, as you can hear in the audio clip below.

Safracatz1 by ahess247

Acer had a tough time in the consumer market as the iPad cut into its consumer netbook sales, giving Dell, still strong in the healthy market for corporate PCs, the opportunity it needed to edge ahead of Acer by nearly two percentage points. ISuppli analyst Matthew Wilkins says it looks like a “firm lead.” Dell also edged out Acer for the number two spot for the entire year, iSuppli says. (Table courtesy iSuppli.)

Overall, iSuppli says the fourth quarter set a record for overall PC shipments with more than 93 million units, up nearly 5 percent from the same period in 2009. For the year, global PC shipments amounted to 345.4 million units, up 14.2 percent from 302.4 million in 2009.

Lately PC market analysts have been blaming Apple and its industry-changing iPad — the second iteration of which goes on sale tomorrow – for damaging the fortunes of PC makers. In this odd case it’s being seen as hurting one to the advantage of another. I have to wonder if Michael Dell feels at all thankful.

And while a search for Meyer’s replacement is underway, I’m told it could easily extend into the summer.

It didn’t take long for rumors about “takeover chatter” concerning AMD to emerge, and briefly yesterday, Dell was mentioned as a possible buyer. AMD shares traded up 4 percent for part of the day but closed down 3 cents during the regular session. Dell more or less shot down the rumor. During its earnings conference call, CEO Michael Dell, answering a question on acquisitions, said, “…we’re looking for relatively smaller sized ingredient acquisitions where we can leverage them with our substantial customer access and distribution.” With AMD currently trading at a valuation north of $6 billion with about $2.2 billion in long-term debt, it’s not the kind of target that would qualify as “smaller sized.”

There will always be rumors of this sort about the perennial number two in the PC microprocessor business. Those who trade on them don’t get something fundamental about AMD: That it would be a complicated company to buy and to own.

Any deal to acquire AMD will necessarily include a third party: Intel. For decades Intel and AMD have operated under a series of patent cross-license agreements that give AMD access to the crown jewels of Intel’s intellectual property, including the x86 instruction set. These patents are on the technology that make a PC a PC, and they are fundamental to the success, or failure, of both companies.

When AMD first sought to spin off its manufacturing operations into the company that became GlobalFoundries, Intel asserted that AMD couldn’t assign access to these patents to a third party without its say-so. This dispute ultimately got the two companies talking and resulted in what I like to call the Treaty of Maui, the settlement of a sweeping antitrust dispute in 2009, a story I reported at the time for BusinessWeek.

There are, however, some limits governing Intel’s conduct in this scenario. When it settled an antitrust case against it last year, Intel agreed to hold off on suing any company that buys one of its competitors for a year, in order to hold “good faith negotiations” over the terms of that patent cross-license agreement. What this all means is that any company that first concludes a deal to buy AMD will then have to pivot and face the possibility of lengthy negotiations with Intel that could, if not successful, end in a costly and distracting patent lawsuit.

Intel may turn out to be willing to play ball, and cut a reasonable deal with any new owner, but the fact remains that every so often the cross-license arrangement has to be renewed. And that’s not to say a determined buyer couldn’t ultimately cut through all this and get a deal done. Dell has $15 billion in cash and could conceivably get a deal done, and being an AMD customer could arguably benefit from owning AMD over the long term, but it has signaled that it’s not interested, and probably never was in the first place.

There are other considerations: AMD is 20 percent owned by the Mubadala Development Company, the investment arm of the Arab Emirate of Abu Dhabi, which changes the potential deal dynamic a bit. Then there’s the big question concerning the wisdom of competing with Intel. As AMD’s prior CEOs will tell you, simply grappling with Intel in the marketplace is a dangerous, thankless job.

But the complication of the Intel cross-license agreement alone should be enough to give any company mulling an AMD buyout serious pause. At the same time it should serve as food for thought for anyone wanting to trade on the latest AMD buyout rumor. This surely is not the last.

Funny how that works. It was Dell himself, after all, who had a big hand in pushing the price as high as it went. 3Par, you’ll remember, was the subject of an epic three-week bidding battle between Dell and HP. When it was over, HP took home the prize, shelling out $2.4 billion for 3Par.

The deal kicked off a flurry of acquisitions in enterprise storage. IBM went on to pick up Netezza, and EMC bought Isilon Systems in November. Dell ultimately did make a deal in the storage space, dropping $960 million for Compellent in December.

At Davos, Dell proceeded to pat his eponymous company on the back for its “discipline” by not raising the bidding price for 3Par even higher. He also said he’s looking to do more acquisitions aimed at data centers and cloud computing.

It didn’t take long for HP to answer: Chairman Ray Lane, fresh off the shake-up that rocked the company’s board last week, told Bloomberg in a separate interview that Dell had been willing to pay “almost what we paid” for 3Par. He does have a point.

Looks like Dell has managed to avoid at least some of the market “air pockets” responsible for Cisco’s weaker-than-expected outlook last week. Posting third-quarter earnings after market close Thursday, the company reported earnings that blew the doors off the Street’s expectations, though sales fell a bit short of them.

The PC maker reported a profit of 45 cents a share on revenue of $15.4 billion. Analysts had expected it to report 32 cents per share on $15.7 billion in revenue–compared to 17 cents a share on revenue of $12.9 billion in the same period last year.

“Our strong results demonstrate that we are listening to customers and delivering what they want,” CEO Michael Dell said in a canned statement. “It validates that our strategy to offer choice and efficiency at every level of the IT enterprise computing stack is taking hold, and we are more focused than ever to being a true partner–not merely a provider–to our customers. Dell is growing in the right areas, and I’m very excited about our momentum.”

“It was showed off at Oracle World by Michael last week and we’ll be launching very, very soon—within the next few weeks,” Midha said of the seven-inch tablet Dell (DELL) showed OpenWorld attendees. “In fact, very much in the near future we’ll be launching the seven-inch tablet as well as the additional three-inch product.”

A three-inch product? I thought the Axim was dead….

Anyway, while Android is the OS of choice for Dell’s seven-inch tablet, it won’t be ubiquitous across these new products. Midha said some will run Windows, and it’s possible that others might run Google (GOOG) Chrome.

Beyond that, details are slim. Dell offered no further specs and did not mention a launch date. But consensus seems to be that the device to which he was refering is the Looking Glass, which is believed to be faster than the Streak, though with the same weak 800×480 screen resolution.

[Image credit: Reuters]

A nasty blow for the company founder, but one that’s not all that surprising, given the decline in Dell’s (DELL) earnings per share over the past two years and discontent over the company’s settlement of SEC allegations that it manipulated accounts in order to meet business performance targets and broke “negligence-based fraud provisions” in its dealings with Intel.

“Mr. Dell is quite properly an iconic figure at the company,” Stanford professor and corporate governance expert Joseph Grundfest told The New York Times. “It is extremely rare to have that amount of shareholder disaffection directed toward an executive who is so central to the company’s past, present and future.”

Well, not that rare. Yahoo (YHOO) co-founder and CEO Jerry Yang didn’t fare so well during the company’s 2008 shareholder vote (better than Dell, though), and we all know what happened to him. Not that Dell will follow a similar path. As company spokesman Jess Blackburn reminds us 25 percent of votes withheld is quite an endorsement if you look at it the right way. Said Blackburn, “The Dell board had expressed its confidence in Michael Dell’s leadership and the majority of shareholders agreed with them.”

Early this morning, Dell said it will pay about $1.15 billion cash for the data-storage company–an 86.5 percent premium over 3Par’s Friday closing share price of $9.65. For Dell, which has been looking to diversify away from its core PC-manufacturing business, adding 3Par to its portfolio is one more way to do so, solidifying its position in the storage and services markets. A pure-play PC and server maker no longer, the company is fast transforming into a full-fledged consulting and services concern to boot, something it must do if it’s to compete with enterprise-technology rivals like Hewlett-Packard (HPQ) and IBM (IBM). Said UBS analyst Maynard Um, “The 3Par deal helps bolster Dell’s competitiveness and profitability in the mid & high-end of the Fibre Channel SAN segment and strengthens its position for cloud & virtualized environments (key long term areas of focus). We also see opportunity for Dell to drive solid growth of 3Par systems (similar to success achieved with EqualLogic) as only 20% of 3Par sales are from outside the US & 80% of sales come from repeat customers, which provides significant growth opportunities by leveraging Dell’s scale, distribution and global reach.”

Dell said last week that it and Mr. Dell were in talks with the Securities and Exchange Commission to settle civil allegations that they violated securities laws in connection with Dell’s dealings with Intel, a longtime supplier of microprocessor chips. At issue, people familiar with the situation say, is whether Dell should have disclosed rebates it received from Intel to investors.

Such rebates have been a focus of government antitrust suits against Intel in the U.S., Europe, Japan and South Korea, which allege that the chip giant has improperly used financial incentives to its customers to discourage major computer makers from buying chips from rival Advanced Micro Devices (AMD).

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Qliance Medical Management Inc. says it has raised $6 million in new funding in a financing round led by Bezos Expeditions, the personal investment company of Amazon.com’s (AMZN) CEO; additional financing came from MSD Capital, Michael Dell’s investment firm. The actor and comedian Drew Carey, Seattle venture capital firm Second Avenue Partners and other investors also joined in the funding of Qliance, which has raised a total of $13.5 million to date.

Qliance operates three clinics in the Seattle area that offer primary care treatment to patients who pay a monthly membership fee ranging between $44 and $84, depending on their age. The company accepts no form of health insurance for its services. Qliance intends to use its financing to expand in Washington State, with plans to open clinics beyond the state as early as next year.

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Apple today has a market cap of $207.99 billion. That means it ranks fourth on a list of the Top Five publicly traded U.S. companies–just below Wal-Mart.

That’s right: Just below Wal-Mart.

1. Exxon Mobil (XOM): 315.05 billion
2. Microsoft (MSFT): 261.71 billion
3. Wal-Mart (WMT): 212.19 billion
4. Apple (AAPL): 207.99 billion
5. Berkshire Hathaway (BRKA): 202.54 billion

An astonishing turnaround for a company whose market cap bottomed out at $630.9 million back in 1982.

Incidentally, at 207.99 billion, Apple’s market cap is more than seven times that of Dell’s (DELL) 29.44 billion, which is pretty funny considering Michael Dell’s proposed solution to Apple’s late-’90s woes…

UPDATE: As a commenter below notes, Apple actually surpassed Wal-Mart’s market cap briefly a few weeks back.

Microsoft bigwig Bill Gates got hip-checked off the top perch as the richest man in the world by Mexican billionaire Carlos Slim (pictured here), on the annual Forbes list of the world’s Richie Riches.

Slim came to the rescue of the New York Times (NYT) a year ago, forking over $250 million to help the cash-strapped media company.

Often in the No. 1 spot, Gates actually got shoved off in 2008 by megainvestor Warren Buffett (now No. 3), with whom he is good friends.

Gates returned to the top rank in 2009, and now Slim–a telecom-and-more tycoon–has surpassed Gates’s net worth of $53 billion slightly with a $53.5 billion kitty.

Here are some of the other U.S. tech dudes–mostly based in Silicon Valley–on the list, in the Top 100:

No. 6: Oracle (ORCL) CEO and founder Larry Ellison ($28 billion)
No. 24: Google (GOOG) co-founder Sergey Brin ($17.5 billion)
No. 24: Google co-founder Larry Page ($17.5 billion)
No. 33: Microsoft (MSFT) CEO Steve Ballmer ($14.5 billion)
No. 37: Microsoft co-founder Paul Allen ($13.5 billion)
No. 37: Dell (DELL) CEO and founder Michael Dell ($13.5 billion)
No. 43: Amazon (AMZN) CEO and founder Jeff Bezos ($12.3 billion)

Both Apple (AAPL) CEO and co-founder Steve Jobs (No. 136 with $5.5 billion) and Facebook CEO and co-founder Mark Zuckerberg (No. 212 with $4 billion) rank in the longer list.