HP shares rose nearly 5 percent to $22.10, up $1.02 as of 11:15 am ET. Investors appear to be showing new confidence in HP and how CEO Meg Whitman is running the show. All the announcements that HP made yesterday bear repeating, because it was a busy afternoon:

 
Update: A few readers have written to point out I was wrong about HP’s old ticker symbol. It wasn’t HP but HWP. Silly me. Even so, if the Compaq name is headed for some lesser level of importance in HP’s future, then perhaps the Q in the ticker symbol, which was added as a nod to Compaq’s old symbol CPQ, to give the impression that the combination was more a merger of equals, should go. Given the choice between them, I would vote for HP. I should stress that I have zero indications that this is even under consideration, and is really just me ruminating.

Analysts had a mixed view. Chris Whitmore of Deutsche Bank Securities has been one of the more skeptical voices on HP’s turnaround prospects. “New sheriff, old game plan,” was the headline on his note to clients today. “We remain cautious on HP’s weak fundamentals, challenging macro conditions and deteriorating cash flow,” he wrote. Despite the beat on earnings, free cash flow — at $1.4 billion in the quarter — declined by half, pointing to what Whitmore calls “very poor earnings quality.” He rates HP as a “sell,” with a $20 price target.

Brent Bracelin of Pacific Crest Securities wrote that he remains unconvinced that an unexpected strength in HP’s PC unit is sustainable. “Apple and Samsung now account for 39 percent of market share across PCs, tablets and smartphones, and have a volume advantage relative to HP’s 6 percent share,” he wrote in a note to clients this morning. He rates the shares “market perform,” or neutral, and worries that HP’s biggest problem is that about half its sales are still tied to PCs and printers.

Whitman took to CNBC this morning to talk about HP’s situation. She portrayed the turnaround under way as about “10 to 15 percent” complete. That means there’s still a lot of work to do ahead. “We’ve laid a lot of pipe and done a lot of groundwork,” Whitman told the network’s anchors in a 13-minute appearance. I’ve embedded it below:

The world’s No. 2 PC maker by shipments after Hewlett-Packard Co. said its world-wide PC shipments rose 44 percent in the quarter ended March 31, compared with a 5 percent industrywide increase. Its profitability has outpaced that of rivals Dell Inc. and HP as the Chinese company has targeted fast-growing emerging markets while its two rivals have revamped their businesses to move away from low-margin PC production. The global PC industry has taken a hit in recent years as users have increasingly traded their computers for smartphones and tablet computers.

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The world’s third-biggest PC maker gave a forecast for gain in sales of 2 percent to 4 percent in the current quarter, which would top out at $15 billion, fully $400 million short of what Wall Street analysts had expected.

That outlook came on top of sales in the quarter just ended that declined 4 percent to $14.4 billion, amounting to a miss of a half billion from the Street consensus. Per-share earnings were 43 cents, also short of expectations by three cents. It was the second miss in a row for Dell.

Naturally, Dell shares are getting spanked. As of 3 pm PT, they’re down almost 12 percent, at $13.33 a share. And the damage isn’t limited to Dell. Hewlett-Packard, which reports earnings tomorrow, is down in after-hours trading by 56 cents, or nearly 3 percent, to $21.22 a share.

The PC maker has introduced new Ultrabooks that challenge the weight and size of its earlier entrants into the market. And it has also unveiled a new line of “Sleekbooks” that undercut the price of Ultrabooks and, in some cases, use chips from Advanced Micro Devices, therefore excluding them from the Ultrabook family.

First, there’s the Envy SpectreXT, a follow-up to the Envy Spectre 14 Ultrabook. The Envy Spectre 14 is more of a premium Ultrabook, due to its glass coating, $1,400 starting price point, preinstalled Adobe and antivirus security software packages, and the fact that it weighs just under a whopping four pounds.

The SpectreXT, in comparison, is 13.3 inches, weighs just 3.07 pounds, is 14.5mm thick, and has an all-metal body. It comes with an Intel Ivy Bridge processor and, like the Spectre 14, claims a long battery life of up to eight hours (although in my review of the Spectre 14, I got about five hours of battery life with programs running, power-savers turned off, and display set to full brightness).

The Envy SpectreXT also comes with Beats Audio, has an Ethernet port in addition to a USB port, and comes with the aforementioned software packages. It will be available in the U.S. on June 8 for $1,000.

HP also introduced new Envy-branded Ultrabooks, available in larger 14-inch and 15.6-inch models, also with Intel’s latest processors. The laptops are, at their thickest, 19.8 millimeters and come with a choice of solid-state or hybrid hard-disk drives.

What’s more interesting is this new category of Sleekbooks. The only notable difference between Ultrabooks and Sleekbooks, aside from price, is their chipsets. The former are thin and lightweight laptops, categorized as such due to an Intel-driven set of technical specifications, as explained here. The HP Sleekbooks are also thin and light, but feature chips from AMD.

The new 14-inch Envy Sleekbook will ship on May 9 for $700; the 15.6-inch model is just $600 — less than half the price of some other Ultrabooks on the market, and significantly less than the starting price of $999 for Apple’s MacBook Air. Both come with the latest AMD processors, with optional discrete Intel graphics built in for heavy multimedia users. Sleekbooks also claim up to eight or nine hours of battery life.

And for business users, the new HP EliteBook Folio 9470m will come to market this fall. This laptop has a 14-inch screen, but is slightly thinner than the Envy Ultrabooks and weighs 3.6 pounds. Another addition to HP’s enterprise offerings is the EliteBook 2170p Notebook, which has an 11.6-inch display, weighs 2.89 pounds and comes with solid-state drive options.

As HP notes, these laptops are “the first show of resolve” for the new HP Printing and Personal Systems group. Back in March, AllThingsD’s Arik Hesseldahl had the exclusive story on the company’s sweeping reorganization, which moved the Imaging and Printing Group under its PC-making Personal Systems Group, with Executive Vice President Todd Bradley in charge of the new unit.

The results beat the consensus view of analysts who had expected Intel to report per-share earnings of 50 cents on sales of $12.84 billion.

The company also said it expects to see sales in the range of $13.1 billion and $13.7 billion and gross margin of about 62 percent in the quarter ended June. This compares with a street consensus of 55 cents a share at $13.43 billion in sales.

Intel’s statement is below. The company will hold a conference call shortly to discuss the results with analysts.

SANTA CLARA, Calif.–(BUSINESS WIRE)–

Intel Corporation today reported quarterly revenue of $12.9 billion, operating income of $3.8 billion, net income of $2.7 billion and EPS of $0.53. The company generated approximately $3.0 billion in cash from operations, paid dividends of $1.0 billion and used $1.5 billion to repurchase stock.

“The first quarter was a solid start to what’s expected to be another growth year for Intel,” said Paul Otellini, Intel president and CEO. “In the second quarter we’ll see the first Intel-based smartphones in the market, ship products based on 22nm tri-gate technology in high volume, and accelerate the ramp of our best server product ever, providing a tremendous foundation for growth in 2012 and beyond.”

Business Outlook

Intel’s Business Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after April 17.

Q2 2012 (GAAP, unless otherwise stated)

Revenue: $13.6 billion, plus or minus $500 million.
Gross margin percentage: 62 percent and 63 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a couple of percentage points.
R&D plus MG&A spending: approximately $4.6 billion.
Amortization of acquisition-related intangibles: approximately $80 million.
Impact of equity investments and interest and other: loss of approximately $20 million.
Depreciation: approximately $1.6 billion.

Full-Year 2012 (GAAP, unless otherwise stated)

Gross margin percentage: 64 percent and 65 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a few percentage points, unchanged.
Spending (R&D plus MG&A): $18.3 billion, plus or minus $200 million, unchanged.
Amortization of acquisition-related intangibles: approximately $300 million, unchanged.
Depreciation: $6.4 billion, plus or minus $100 million, down $100 million from prior expectations.
Tax Rate: approximately 28 percent down from prior expectations of 29 percent.
Full-year capital spending: $12.5 billion, plus or minus $400 million, unchanged.

For additional information regarding Intel’s results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm.

It’s also the first of several chip stocks to report in the coming days. Sterne Agee analyst Vijay Rakesh summarized a few to watch in a research note to clients today.

Generally, he says to expect semiconductor companies to report results that range from in line with expectations to slightly up, and the outlook for the June quarter should improve.

One reason for that: PC sales estimates came in higher than expected from both Gartner and IDC last week. “We believe improving shipments were primarily a result of restocking rather than end-market demand. We believe both AMD and Intel should deliver in line to modestly better” results for the quarter ended March, he writes. Of the two, he says, AMD could deliver more upside on its results when it reports earnings on April 19 because its consensus estimates are low. Analysts expect it to report earnings of 9 cents a share on $1.56 billion in sales.

Intel, its strength already established, has higher expectations more consistent with its recent performance. The consensus of analysts calls for it to report 50 cents of per-share earnings on $12.84 billion in sales.

A supply chain disruption in hard drives that for a few months messed with the PC industry is coming to an end. But sales of Ultrabooks aren’t impressing anyone, Rakesh says. “Ultrabook sell-through is weak primarily on higher retail pricing versus mainstream notebooks. There are only 15 Ultrabooks on Best Buy versus 280 Notebooks listed,” he writes.

In the server space, Intel’s Romley chip is ramping up to full capacity, but he expects the competition from AMD to increase in coming months. One reason: AMD’s acquisition earlier this year of micro-server vendor SeaMicro.

One more chip company he likes among those reporting this week: Qualcomm. Rakesh says it has strong tailwinds, including Apple’s expected iPhone5, the latest iPad and wins with phones and tablets at Samsung.

We all know how that turned out. Dell first conquered the PC market, and the ultracompetitive environment it created drove several companies out of the market: IBM sold its PC business to Lenovo; Gateway sold itself to Acer; Hewlett-Packard acquired Compaq. Other lesser players are all but forgotten.

It’s as if Dell was a victim of the hyperefficient world it created. HP is now the world’s biggest PC maker, followed by China’s Lenovo, with Dell in third place on a global basis, as of last quarter.

PCs — consumer and business PCs — still amount to about half of Dell’s business. But there’s another way to look at Dell, and that’s from the point of view of its enterprise business. I learned this in a recent conversation with Steve Felice, Dell’s chief commercial officer. I also learned that the consumer PC business, for which Dell is still widely known in the U.S., amounts to about one-fifth of its business, while its enterprise lines of business, including commercial PCs, amount to 50 percent.

It’s all part of the long-term transformation that has been underway at Dell for a few years now. The company recently did three acquisitions in as many days, the most significant of which was for Wyse Technology.

That caught my attention. But first I wanted Felice’s reaction to the findings of a J.P. Morgan survey of 100 CIOs, saying that the release of Microsoft’s Windows 8 wouldn’t be much of a catalyst for PC buying at large companies.

(We had a pretty good talk, so, arbitrarily, I left in an eighth question from our exchange.)

AllThingsD: Steve, there’s a survey out from J.P. Morgan recently that says that CIOs from large companies don’t see Windows 8 as the sort of thing that would get them buying PCs again. That, to me, could be interpreted as bad news for Dell. Is it?

Felice: I don’t think so. Operating system changes have never been a catalyst, at least not in the corporate world. Consumers and small businesses take off with it right away. Corporations have rollout schedules, and they stick to them. Some of them are just starting to deploy Windows 7. They do their three-year roll-out schedules, and when it’s time they’ll go to Windows 8. About 55 percent of our business are the larger mid-sized and up public companies. The other 45 percent are small businesses and consumer. We’ll see some buying within that 45 percent. On the others, they will go on their normal schedule.

On the enterprise side, I was just with a bunch of CIOs here, and there are some very common themes about why I think they are going to spend some money. And it’s really to continue a transformation of their own infrastructure, to take advantage of virtualization and cloud computing and bigger pipes to transport information. There is a pretty common theme that there is more opportunity to get more out of assets. There is more optimism around moving away from legacy architectures and into open systems. The whole concept of being more “open to open” is there. We view that as good, because we’re the pure play when it comes to moving to open architectures.

What are the CIOs you talk to worried about these days?

Security. It’s easily in the top three concerns. We think we added to our portfolio two of the best assets out there. One is intended to tell you how to figure out what’s going on in their world. That’s what SecureWorks, a company we acquired recently, does. It analyzes your infrastructure and tells you where your threats are coming from and how to prevent them. And then we just announced the acquisition of SonicWall. They built a nice unified threat-management platform. From my viewpoint, it helps enable the movement to open. Some people are afraid to leave the proprietary world because they think it’s more secure.

Where are you on mobile? I read that you just killed a smartphone model. Where is Dell going on the mobile front?

I would characterize the last couple of years as us experimenting with what form factors and operating environments will work. The good thing is that we’ve never overextended ourselves in mobile, yet we’ve launched a lot of products, and we’ve learned a lot from them. We’ve launched tablets — 5-inch, 7-inch, 10-inch. We’ve launched them in emerging markets first, we’ve launched them in developed markets first. We’ve launched smartphones around the world. So we have an active smartphone that we just launched in China, and one in Japan. We just end-of-lifed one in the U.S., which is what I think you’re referring to. We have a road map of other products that are coming up. We are predominantly a commercial-oriented business that has some consumer business, but the lines are blurring.

What we’ve learned is to look at the consumer from the commercial side, not the other way around. Some companies who have done well in mobility are all about consumers and entertainment. And looking at the consumer as an individual, without any regard to how they might interact on the professional side of their life. Executives of any company I talk to say these devices are driving them crazy. They don’t know what’s happening to their information, how they get it back, nor how to interact with the other devices that people are bringing into the workplace. Or how to support them and control them. No one is dealing with that. So, generally, you’re going to see Dell think more broadly about the mobile ecosystem. When you next see devices from Dell, you’ll see us thinking more about the security of them, the end-to-end aspects of managing them, from the data center to the end user.

And yet what I’m hearing from a lot of companies is that they’re just adopting iPads, mainly because the bosses have them and love them. This is how Apple is penetrating the enterprise. How is Dell going to compete with that?

It’s unique, no question. And so it’s got some infatuation aspects to it. But then I talk to these customers, and because there isn’t a lot of alternatives, what they’re tolerating is pretty interesting. They say they have one of those products. Then the problems start coming out. First, the office applications don’t work very well, and they have trouble reading PowerPoint decks. And then they can’t wirelessly print easily, and some days they’re not able to get on the network at the office. And I look at that and say, they’re tolerating a lot because they like the form factor. Our conclusion is that there need to be some alternatives.

We’ve got the Dell XPS 13 Ultrabook, and we take it around and show it to customers, and invariably the decision-maker wants one. And then he says that if he had this, he never would have bothered with the tablet. So we took a consumer-oriented product and put pro support on it, and showed that to CIOs and said that if their executive team used it, they’d get the same support as they would on their Latitude product. So when it breaks, someone will come to the office and fix it, and you don’t have to go stand in line at the Apple store. Then we put image management on it. If you want a corporate image that has to be managed, we’ll do that. Institutions want thin and light devices, but they also want the options to secure and support them. The other thing that is happening, with ARM, you’ll get even more form factors.

Well, let’s talk about the PC, then. People keep talking about the decline of the PC. The research houses keep predicting market declines, and sometimes they materialize and sometimes they don’t. But even so, the numbers — at least globally — are flat to slightly up. Yet when you drill down to different regions, you see very different stories, with different countries growing like crazy. How does Dell see this right now?

This is a weighted math problem. The lowest growth rates are in the developed world, which will remain more of a replacement cycle world. The U.S. is like that because PC penetration is very high. Then you go to India and China, where it’s very low. What’s happening is that the emerging markets, where combined, they will be bigger than the developed world. And they are still growing rapidly, so the math is going to reverse itself. You’ll still see low-single-digit growth rates in the developed world, but healthy growth rates in emerging markets — but the emerging markets will be bigger. We still see double-digit growth in China. Look at Indonesia, there’s 300 million people just starting to buy PCs. As these countries industrialize and get more mature, they just need basic computing.

And how do those markets develop?

It comes back to the first thing I talked about. These countries don’t have the legacy baggage. They’ll grow, they’ll industrialize, they’ll need more infrastructure. And what will they buy? They’ll buy standard servers, storage, and open systems. This is happening in China, and its why we’re No. 1 in servers there.

Do you think people still associate Dell with the PC and don’t give it enough credit for its greater focus on the enterprise?

I’d have to say yes. Some of that is our own doing. We have this very large direct model, and we have a tendency to talk to customers one on one. So we tend not to do a lot of brand advertising. So our consumer advertising is more visible. If you ask people randomly what portion of our business is consumer, they’d say it’s more than half, but in fact it’s only about 20 percent. And if you ask people what portion of our business is servers and storage, they don’t know, but it’s more than 50 percent.

If you combine consumer and commercial PCs, how much is that?

About half is PC, and that’s global. But I think with all the acquisitions we’ve done, and a lot more customer testimonials we’re doing, the perception is changing. We’ve done some targeted testing of campaigns where we say, ‘Do you know that Dell does this?’ The perception of Dell as an enterprise provider skyrocketed. Brazil is an interesting case, because we entered the server and storage market there before the PC market. That’s because the only way to really be successful in Brazil with PCs is to have your own manufacturing there, because of the stiff tariffs. So in Brazil, Dell is thought of as an enterprise company. You’ll see more of a commitment this year to do more brand-oriented advertising around the enterprise.

One early customer is Rob Legato, the visual effects supervisor who won an Academy Award for his work on the Martin Scorsese-directed hit motion picture “Hugo.” Legato will be talking about ioFX with Fusion-io chief scientist and Apple co-founder Steve Wozniak at a conference in Las Vegas next week.

Fusion does some cool stuff with flash memory. Here’s the part where I roll out the old metaphor that has served me so well: In pretty much any computer, you can think of the processor as a fast-moving, highly efficient, type-A personality, constantly in a hurry, and always waiting impatiently for the rest of the system to give it more work to do. The slowpoke in the deal is the hard drive, which, though it’s already spinning at a super fast rate, just can’t get data to the processor fast enough. So the processor sits around, tapping its foot and looking at its watch, waiting for the other parts of the system that feed it data to work to keep up.

In high-performance computing, where there’s more data to be crunched than in most average computing situations, this is sort of a big deal. You want the processor to be as busy as possible — mainly because the systems are so expensive, and you want to get your money’s worth out of them — but also because jobs get done faster.

So Fusion-io’s stock in trade is a series of insert cards that bring flash memory right up next to the processor. The flash chips grab great big armloads of data and hold on to it, handing it off to the processor in a way that keeps it happy and busy and not impatiently waiting — at least not so much.

We’ve seen the technology brought to bear at places like Credit Suisse, which added Fusion’s flash cards to its trading systems. And its technology is also used in data centers belonging to Facebook and Apple.

On top of that, Fusion has relationships with all the big server vendors: Hewlett-Packard, IBM, Dell and SuperMicro all sell systems with Fusion-io on board.

Workstations are essentially heavily tricked-out PCs that are used primarily in two professions: Animation and special-effects work for movies and TV and computer-assisted design and modeling, used by folks who design buildings and cars and planes and pretty much anything else you can think of. They have the same problem that servers have — agitated processors constantly waiting for the rest of the system to catch up with them.

At this point, none of the workstation vendors are offering the card as an option, but if you’ve got a professional workstation — like, say, an Apple Mac Pro, which has three PCI Express slots — you might add one of these cards and speed up your work. In the meantime, the company is working with workstation vendors to get the ioFX insert cards certified. My guess is there will be more than a few visual artists who won’t bother to wait.

Fusion-io shares are up almost 11 percent — or $2.64 — to $27.30, as of 11 am ET; not so much on this news — workstations are kind of a low-volume market — but on an analyst report from Piper Jaffray suggesting that Cisco Systems may be close to a deal to add Fusion-io’s flash technology to its Unified Computing System platform.

The report goes on to suggest that Cisco could, over the next three or four quarters, become one of Fusion’s bigger customers, along with Facebook and Apple, and could account for more than 10 percent of Fusion’s business — which could, in turn, lead to a doubling of revenue this year. For the record, sales were $197.2 million in Fusion’s fiscal 2011. Do the math.

It’s not so much about any shifts in sentiment or intention for spending among large companies, it’s just that the dollar is currently strong against other currencies, so U.S.-domiciled companies are in a weaker position when selling to customers in other countries. When accounting for that discrepancy, Gartner says it expects overall growth in spending of 2.5 percent, but on a constant currency basis, the digits would be transposed for a healthier 5.2 percent.

Spending by governments will likely contract, thanks in no small part to the austerity measures being put in place in the euro zone.

The highest rate of growth will be in the telecommunications equipment sector, which will grow by nearly 7 percent, Gartner says. A lot of that is thanks to mobile going to mobile, but also to speeding up networks. See the rest of the segments and their expected rates of growth in the table I screengrabbed from the press release, below:

Earlier this week, Gartner singled out IT spending in emerging economies, which it said will amount to an impressive trillion and change by itself. And last week we got a glance at the sentiment from 100 CIOs at large enterprises, courtesy of J.P. Morgan, indicating that growth is likely to tick upward this year. Up is good.

It comes in the form of a survey of 100 CIOs by the investment bank J.P. Morgan. The firm finds that, on average, CIOs say they’re going to boost their IT spending by 2.7 percent this year, up from 2.4 percent in 2011. That may not seem like a big change, but here’s why its important: It’s the first time in a few years that the same survey has detected a directional change in sentiment. CIOs are at long last saying they intend to boost their spending on IT, rather than trimming it back and back and back as they have for the last several years. “In our prior CIO survey in September 2011, the directional movement indicated a reduction in planned spending growth, as at that time CIOs were starting to pare back on spending during more uncertain macroeconomic conditions,” the firm says in its report, which was shared exclusively with AllThingsD.

The optimism is a bit more pronounced when you see it expressed in the graphic below, which I grabbed from raw survey results. More than two-thirds of the CIOs surveyed said they planned to boost their overall IT spend this year, most of them by a modest 1-5 percent, but some by more than 10 percent. Last year, the figure was 58 percent, but it usually swings up by only 3 or 4 percentage points, analyst Mark Moskowitz told me.

“The overall tone we got in our conversations with these CIOs was more optimistic than it has been in a while,” Moskowitz said. “They have the green light to start projects that are going to take several quarters to get done. Most aren’t willing to do that when they’re worried their overall business is going to roll over.” A lot of that has to do with more confidence in the overall macroeconomic environment.

And where will that growth be? And, perhaps more importantly, where won’t it be? Software, storage and security are looking like big spending priorities among the CIOs surveyed. Business intelligence tools and getting mobile devices integrated are also high on the list — there’s that ongoing trend toward “bring your own device” (BYOD), rearing its persistent head once again.

Employee-purchased iPhones, iPads and Android devices are supplanting company-assigned BlackBerrys. “BYOD is real,” Moskowitz says. “And you have to assume that Apple is going to be the one that benefits the most from it.”

Other winners include EMC and NetApp, as they play strongly in networked storage. Server virtualization — making one physical server act like dozens of servers, using software to subdivide its resources — also has a lot of room to grow, the survey finds. That’s good news for VMware.

Losers? There are few. Intel’s new Romley chip isn’t going to be as big a deal in spurring spending on new servers: In fact,91 percent of CIOs surveyed said they don’t expect Intel’s new chip to drive new spending in the data center. Intel’s last big upgrade, Nehalem, did change the game, Moskowitz says. The trouble is, most of the companies using Nehalem-generation chips in their servers are happy with them, and are unlikely to bother with the expense of an upgrade, for now.

Nor is Windows 8 going to cause a new round of PC buying, as both Hewlett-Packard and Dell are hoping. “A new version of Windows hasn’t caused a PC upgrade cycle since 1995,” Moskowitz told me. Asked directly if Windows 8 was expected to drive a major PC upgrade cycle, 78 percent of the CIOs in the survey said no. In fact, at least 30 of the CIOs in the survey said they were still working on deploying Windows 7. Ouch. Perhaps it’s too much to ask for things to be looking up for everyone all at once.

(Image is a movie poster for the 1935 British film starring Cicely Courtneidge, but the title song in this case is, well, awful. What I really wanted was an image of Fred Astaire dancing with Joan Fontaine to the underappreciated George and Ira Gershwin tune of the same name, from the 1937 film “A Damsel in Distress,” but I could find nothing suitable. So — loving Gershwin tunes as I do — just for fun, I’ve embedded both Astaire and Billie Holiday singing the tune, below, courtesy of Grooveshark. Yes, I’ll admit, sometimes I have a little too much fun in this job.)

HP Shares closed down 52 cents to $23.46 a share, representing a drop of 2.17 percent in the wake of the official announcement of the plan, which AllThingsD reported yesterday.

While, on its face, the combination of the PC and printer groups into a single operation would save some operational costs, investors seem unconvinced that the move will make a sufficient difference to get the company moving in the right direction as CEO Meg Whitman has promised to do, though she’s conceded the turnaround will likely take years.

At least one analyst summed up the negative sentiment around the reorg. Rob Cihra of Evercore Partners called the move “uninspiring” and reminded everyone that HP made a similar move under former CEO Carly Fiorina back in early 2005 toward the end of her tenure. Her successor, Mark Hurd, broke the groups apart again before the year was out.

One thing Cihra appreciates is that Whitman is willing to admit where the troubles are: An over-levered balance sheet and a printing business that is suffering through a fundamental — not a seasonal — decline, among other problems. But, he writes in a research note issued to clients today, admitting the problem is only the first step. “It is encouraging for new CEO Meg Whitman to have started admitting issues others wouldn’t … Our concern is that any fixes look far from easy and likely involve a marathon, while ‘reorgs’ don’t even get HP to the starting line, in our view,” he wrote. Given the drop in HP’s share price, investors, for now, seem to agree.

In fairness to Whitman, she’s only six months into the job, and today’s move is only a first step. But the first step is pretty much an admission that a bigger change is on the way, including job cuts. “Everything is on the table,” Whitman told The Wall Street Journal today, though she declined to speculate on the number of jobs that might be eliminated. It’s going to be a rocky year at HP.

The reorganization appears to be bigger than we reported. There are a few other things, aside from the combination of the PC-making Personal Systems Group and the printer-making Imaging and Printing Group. One of them is a biggie: If I’m reading this right, then the $22 billion Enterprise Storage and Networking Group appears to have been renamed the HP Enterprise Group, and it appears that the $36 billion Services Group just got combined under Dave Donatelli. That is about as equally important a strategic shift as the other combination.

Update: Not quite so big, after all: HP just called to clarify that only Technology Services is being added to the Enterprise Group, not the Enterprise Services Group run by John Visentin. Sorry for that bit of confusion.

In another move, Global Sales will report to Donatelli, and will be combined into the Enterprise Group. And it looks like Jan Zadak, who had been on the rise since being promoted under Léo Apotheker last year to head Enterprise Sales, is going to get a “new role.”

So now we know what CEO Meg Whitman meant when she said she wanted to streamline and simplify HP’s operations. Operationally, she has created what appears to be one really huge organization in PSG ($65 billion in 2011 and flatlining) and to increase the size of the newly created Enterprise Group a bit by adding to it Technology Services and Global Sales. It’s hard to determine what the combined size of the organization is by revenue, because HP doesn’t break out sales for Technology Services.

Software appears to have been left alone in this shakeup, for now. That group is run by Bill Veghte, who was recently promoted to chief strategy officer, while another software operation, the Information Management Group, which combines Autonomy, the British software firm for which HP paid $12 billion last year and Vertica. It is run by Mike Lynch, the former Autonomy CEO. British software firm for which HP paid $12 billion last year.

Marketing functions have been unified under Marty Homlish, while communications have been unified under Henry Gomez.

Here’s the press release:

HP Announces Organizational Realignment

PALO ALTO, CA — (Marketwire -03/21/12) — HP (NYSE: HPQ – News) today announced an organizational realignment to improve performance and drive profitable growth across the entire HP portfolio.

As part of this realignment, HP’s Imaging and Printing Group (IPG) and its Personal Systems Group (PSG) are joining forces to create the Printing and Personal Systems Group. The combined entity will be led by Todd Bradley, who has served as the executive vice president of PSG since 2005.

Vyomesh Joshi, executive vice president of IPG, is retiring after a highly accomplished 31-year career at HP. Under Joshi’s leadership, IPG has grown revenue from $19 billion to $26 billion, and doubled its operating profit to approximately $4 billion.

“VJ embodies the spirit of HP and his impact on the company has been tremendous,” said Meg Whitman, president and chief executive officer, HP. “Under his leadership, IPG accelerated innovation and pioneered solutions that transformed the printing market. We wish him the very best as he embarks on a new chapter in his life.”

Combining these two entities will rationalize HP’s go-to-market strategy, branding, supply chain and customer support worldwide. This will lead to a better customer experience and drive innovation across personal computing and printing. This realignment is expected to provide opportunities for cost savings and accelerate HP’s ability to pursue profitable growth and reinvest in the business.

“This combination will bring together two businesses where HP has established global leadership,” said Whitman. “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.”

In addition to combining PSG and IPG, HP also is taking steps to unify and streamline certain key business functions.

The Global Accounts Sales organization will join the newly named HP Enterprise Group. This group will be led by David Donatelli and includes Enterprise Servers, Storage, Networking and Technology Services.

The new structure is expected to speed decision making, increase productivity and improve efficiency, while providing a simplified customer experience. A new role for Jan Zadak, executive vice president for Global Sales, will be announced at a later date. Zadak will work with Donatelli to ensure an orderly transition.

HP also announced that it will unify its Marketing functions across business units under Marty Homlish, executive vice president and chief marketing officer, HP. This will allow for even more effective brand-building and marketing activities, and will create efficiencies across the business units.

HP’s Communications employees worldwide also will be similarly unified under Henry Gomez, executive vice president and chief communications officer, HP. Together these two moves will create a more powerful voice to demonstrate the power of “One HP.”

Finally, HP is moving the Global Real Estate function from Finance into Global Technology and Business Processes to address real estate consolidation and improve the workplace experience for HP employees.

“Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” added Whitman. “The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends.”

In an interview with Reuters, Krzanich says he has fine-tuned the company’s supply chain in order to meet an anticipated demand for tablets. “We will start to see more and more of our capacity and our output go to things that are mobile, like phones and tablets and other devices,” he tells the global newswire.

Indeed, when the man responsible for Intel’s massive global chip-manufacturing operation speaks, he does so with the authority of a company that tracks the pulse of demand for chips obsessively, so he doesn’t make so public a statement lightly.

Yet the basic competitive problem remains. While Intel still dominates the roughly 300-million-unit-per-year market for PC microprocessors, it has struggled to compete against chips based on designs from the British chip designer ARM, which power most of the world’s smartphones and tablets — including, not insignificantly, the iPad. And while Intel’s lower-power Medfield-generation chip has landed in designs from Lenovo and Motorola Mobility, the wins are seen as progress in a race in which it was already well behind the leader.

Perhaps more interesting is how Reuters casually refers to Krzanich as a candidate to succeed CEO Paul Otellini. Intel shook up its management ranks in January, and promoted Krzanich to COO. Covering Intel includes paying attention to a constant drumbeat of speculation about who the next boss is going to be. Otellini is 61, and the company’s mandatory retirement age is 65, so the succession race, and the perennial handicapping chatter that goes with it, will be something of a marathon.

Krzanich would be a logical successor, mainly because most Intel CEOs become COO first, including both Otellini and his predecessor Craig Barrett. Yet there’s still one rival who bears continued attention: Sean Maloney, the English-born current head of Intel China, had been widely seen as the leading contender before suffering a stroke two years ago. However, people who know him say his recovery is remarkable.

I noted Maloney’s return to competitive rowing last year. A September profile of Maloney in Fortune had more to say on that subject. While he has largely recovered physically, the main lingering effect of the stroke has been on his speech. If he can get close to sounding as he did before the stroke, we may have a real horse race on our hands.

While 368 million units — the number Gartner reckons will be sold this year — seems like an awful lot, it amounts to growth of only 4.4 percent over 2011. The economy — Europe is still weak amid ongoing sovereign debt problems, plus supply chain troubles brought on by the flooding in Thailand where most of the world’s hard drives are made — is weighing the market down, Gartner says.

What will save it? Windows 8 and Ultrabooks, but not before 2013, when Gartner says to expect sales of 400 million PCs. They might stimulate renewed interest among consumers and businesses. But it’s hard to say.

What about Apple’s iPad and other tablets running Android eating into PC sales? There’s no question that they do. But that impact is relative: Gartner last sized up the scope of the tablet market last fall, and pegged it at 64 million units in 2012, which is probably conservative, seeing as how Apple sold 15 million iPads in the fourth quarter of 2011.

What has often happened with forecasts like this is that chipmaker Intel gets batted around a bit in a negative way, as financial analysts work the forecasts into their own expectations for the stock. If PC sales are slowing, the thinking goes, then Intel, which supplies most of the world’s PC microprocessors, will no doubt suffer.

Intel has tended to do well despite these forecasts, and cites growth in certain developing markets, like Brazil, India and Russia, where Gartner and other research firms have more limited visibility, as keeping demand for its chips growing.

Gartner tries to address that point in a summary of its forecast: Emerging markets will be key to driving growth, says its analyst, Ranjit Atwal, and most of the growth in the PC business will come from these countries through 2016. But the upshot is that if all you can think about is buying a new iPad and not a new PC, you’re not exactly alone in the world.

Microsoft disclosed on Wednesday that Windows on ARM won’t offer the same manageability features that businesses have come to rely on for overseeing their legions of computers.

“Although the ARM-based version of Windows does not include the same manageability features that are in 32-bit and 64-bit versions, businesses can use these power-saving devices in unmanaged environments,” Microsoft said in a document released ahead of its Windows 8 event in Barcelona.

A lack of manageability isn’t the only reason many big businesses probably won’t want to go Windows on ARM. It also won’t work with any traditional desktop apps other than Office.

Microsoft also outlined a “Windows To Go” feature that allows businesses to offer workers access to Windows 8 and corporate apps on a thumb drive.

“Growing mobility and consumerization trends pressure IT professionals to provide users with secure access to a corporate operating system and apps in situations when a device or network is out of the IT department’s control,” Microsoft said. “Windows 8 includes the ability to provide users with a full corporate copy of Windows (along with user’s business apps, data, and settings) on a USB storage device.”

The feature works with both Windows 7 and Windows 8 machines.

“When users insert their device into any Windows 7 or Windows 8 compatible PC and restart the PC, they get their entire personal environment, and operate as a fully managed device,” Microsoft said. “When they sign out, they can remove the USB device, and it is ready to use on another PC.”

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]]> http://allthingsd.com/20120229/windows-8-on-arm-wont-offer-all-of-the-same-business-features/feed/ 0 http://allthingsd.com/20120229/microsoft-says-hola-to-windows-8-beta-in-barcelona/ http://allthingsd.com/20120229/microsoft-says-hola-to-windows-8-beta-in-barcelona/#comments Wed, 29 Feb 2012 11:52:36 +0000 Ina Fried http://allthingsd.com/?p=179159 Aiming to show its mobile chops, Microsoft is using the world’s largest cellphone show to debut a new test version of Windows 8.

The “consumer preview” version will feature a number of advancements over the early developer version released last fall. Perhaps most notably, this version will include the built-in app store that will be part of the next Windows. (Only free apps will be available, Microsoft has said.)

Windows 8 is one of the biggest bets in the company’s history. Aiming to respond to competition from both Macs and iPads, among other factors, Microsoft is making some big changes to its flagship operating system.

In particular, Windows 8 will be available (albeit with some different capabilities and compatibilities) on both ARM and traditional PC processors.

Microsoft has brought over the tiled Metro interface first introduced on Windows Phone (a look first shown at our D9 conference last year) and is introducing an entirely different type of application. In most cases, new-style apps will be distributed only through the Windows app store.

Earlier this month, Microsoft confirmed that Windows on ARM — complete with the next version of Office — should show up on new PCs around the same time as the operating system comes for PCs with chips from Intel and AMD.

However, Office and Windows 8 itself will be the only traditional desktop apps that run in Windows on ARM.

We’ll have live coverage of Microsoft’s Windows 8 event starting around 6 am PT. If you can’t wait to get some Windows 8 news, Microsoft has posted a guide for businesses on some of the corporate-oriented features contained in the new test build.

Earlier:

3:12 pm: Things haven’t kicked off. You haven’t missed anything. Just got situated.

3:12 pm: The event is at a swank venue overlooking Barcelona. Microsoft covered over a swimming pool to build this temporary facility.

Here’s the view from outside the event:

3:18 pm: “Please take your seats,” booms the invisible voice. “The show will begin shortly.”

The show?

3:20 pm: If you haven’t already, check out this story, which reviews some new business details about Windows 8, including a “Windows to Go” feature that lets Windows run on a thumb drive.

3:21 pm: Windows exec Tami Reller kicking things off, noting to half the crowd that they are on top of the pool.

It’s not my half, so we should be safe.

3:22 pm: Cue Windows President Steven Sinofsky. “We are really excited to be here,” Sinofsky said, before correcting himself to use Microsoft-preferred parlance of “super-excited.”

3:23 pm: Hits key points for Microsoft about Windows 8: Bold reimagining, from chipset to interface and application model.

Today, there are too many trade-offs, Sinofsky said.

We’re choosing between performance or battery life, consumption or content creation, touch or keyboard-and-mouse.

Win 8, I’m sure he’s about to say, is no-compromises.

Yep. Just said it.

3:26 pm: Okay. Here we go, changes in Windows 8 since the developer preview.

“Lots of the product” wasn’t done with developer release, Sinofsky said.

3:28 pm: Since developer preview, 100,000 code changes to Windows 8.

“It’s much more polished, much more refined,” he said.

“Windows 8 is a generational change in the operating system,” Sinofsky said. “Things are different than the last time we made a generational change with Windows 95.”

3:31 pm: Uh-oh. Sinofsky says one plus one, when it comes to apps in Windows 8, equals three.

I’ll tell you this, if that’s the case, I don’t want to use the calculator app.

3:32 pm: Demo time. It’s Julie Larson-Green, who heads design and vision for Windows 8, and Antoine Leblond, the VP who has headed up the Windows Store that is built into Windows 8.

3:34 pm: Larson-Green demoing, starting with login screen, including photo-based password that they have shown. Boots to start screen with a bunch of apps, including Kobo, some Xbox live games, as well as tiles for friends and Web sites.

“I can have as many as I want,” she said.

3:37 pm: The goal, she said, is that everything should be “fast and fluid,” and she said all features and tweaks were judged to make sure they lived up to that.

3:38 pm: Among the preinstalled apps in preview is Xbox Live Games, although that demo generated two error messages (but fast and fluid ones).

3:39 pm: Now demoing Cut the Rope, which its developer has taken from an HTML5 app to Windows 8.

3:40 pm: Windows 8 has a video and music store built-in, with rent and purchase options.

3:41 pm: Switching apps is easier than hitting alt-tab, as in traditional Windows. That was fast, but not so fluid. Now, choosing among open apps is a swipe away.

3:42 pm: There’s a people app that connects to Facebook, Windows Live, Twitter, Google and Exchange. This seems to work very similarly to the way they work on Windows Phone, which is to say nicely.

3:45 pm: Systemwide sharing allows apps to share with one another and share to services.

“That is a quick peek at Windows 8 running on this tablet PC,” she said, handing off to Leblond to show it on a laptop.

“Windows 8 isn’t just about tablets and touch devices,” Leblond said.

He’s showing things on a Lenovo Ultrabook.

Logs in with a four-digit PIN code, another of Windows 8’s login options.

3:49 pm: If you are taking a drink every time you hear “fast and fluid,” you are already too drunk to read this.

3:55 pm: Now he’s demoing the familiar desktop in Windows 8. He shows Office. (For you Windows nerds out there, it’s labeled “Build 8250.”)

3:57 pm: Desktop is just another app, Leblond says, showing how a Metro-style app can run next to the desktop.

All of the things you know and love in Windows 7 are still there, Leblond said.

Larson-Green is back to show an Acer all-in-one with touch and keyboard.

And she logs in with a password this time.

Cool thing is all the stuff from her other machine is there on this machine, just by signing in to that machine with the same Windows Live account. (Not instantly, I don’t think, but still.)

SkyDrive, Microsoft’s cloud storage, is integrated too.

Here’s the desktop app, by the way:

The consumer preview is now available, Microsoft says on its Web site.

4:04 pm: We’re getting a tour of the store from Leblond. I’m multitasking and reading the just-issued press release, too.

4:05 pm: Not much in the press release that looks new to me. New preview version of Internet Explorer 10; test ARM hardware being made available only to select partners, as they said earlier this month.

There’s also a mention of sharing across Windows 8 and Windows Phone, but they haven’t talked about that onstage yet.

Okay, back to the event. Leblond reminds audience that during beta — err — consumer preview, only free apps will be in the store.

4:07 pm: Leblond notes that the company had an apps contest to allow a few small app developers to join the big names in the Windows Store. There are eight winners, but they flipped by too fast for me.

SigFig and Air Soccer are a couple of them.

4:10 pm: Not surprisingly, some folks are telling me on Twitter that Microsoft’s servers are getting hammered, and downloads are going slow.

Patience, people, patience. (I know, I’m not patient, either.)

By the way, everything Microsoft has shown today could have been done on ARM, I believe. The only desktop app shown was Office 2010. (Slight difference: Office 15 will be built into Windows on ARM.)

4:11 pm: While OS is pretty ready, Sinofsky said, the add-on apps are at an earlier stage. Probably going to be updated, look may change and others may be added.

4:13 pm: Charms feature that allows for sharing among apps that don’t know about one another is kind of like a modern, cloud-connected clipboard.

One of the demos, for example, was a USA Today article being shared to WordPress.com.

4:14 pm: Talk shifts to hardware, with Sinofsky previewing some of the stuff partners have been working on.

Coming on stage is Mike Angiulo, who heads up some of the work with hardware makers.

Angiulo shows a Windows 8 ARM tablet.

4:19 pm: The “fast and fluid” thing has reached epidemic proportions.

4:21 pm: Angiulo showed a very brief glimpse of Office 15 on Windows on ARM.

I have a feeling people will be going back in the replay a lot to see that part.

I’ll spare you my blurrycam shot. I looked at it. Even I can’t tell which app it was.

Angiulo holds up a next-generation Intel Ultrabook, as well. It’s silver, and says “Ultrabook” on the hinge.

Inside, Angiulo said, is mobile broadband, touchscreen and Ivy Bridge chip.

4:25 pm: Demo of fast start-up, which Angiulo says can be done in as little as eight seconds from “cold boot.”

4:26 pm: Cool laptop with motorized door that flips down to reveal ports.

For road warriors, Sinofsky said, “ports aren’t an option. You really, really need them.”

4:27 pm: Second-generation Samsung Series 9 is the latest in the hardware wheel-of-Windows 8-fortune.

Next up, carbon fiber Dell XPS 13, a 13-inch laptop in a 12-inch design.

Not just fast boot and resume, Angiulo said. Network connectivity can happen in under a second.

Other wireless networking features — cost-aware network switching to auto-switch from mobile broadband to known Wi-Fi or your carrier’s Wi-Fi.

4:31 pm: In many cases, Sinofsky promises, your PC will be able to log back into a known network before a user types in their password (for those who need a password to resume).

4:32 pm: Lenovo’s IdeaPad Yoga, an interesting device from CES, makes an appearance. It can fold into a tablet, laptop, as well as a presentation-style mode.

Trivia time: Microsoft Mouse turns 30 this year, Sinofsky said.

Giant 82-inch Gorilla Glass screen in the back isn’t a monitor, but a Windows 8 PC from Jeff Han’s Perceptive Pixel. He’s the guy who builds that high-end CNN touchscreen.

They also demo NFC-pairing of a wireless speaker.

4:41 pm: Windows 8 can treat a bunch of hard drives like one big physical drive, as part of “Storage Spaces.”

4:43 pm: Last demo was actually done on a Windows 7 PC that was running Windows 8 off a flash drive using the “Windows to Go” feature that leaked out earlier today, thanks to a business guide posted to Microsoft’s Web site a wee bit early.

More Windows 8 enterprise talk at CeBit in a few days, Sinofsky promises.

4:46 pm: 4:46 pm: “Touch PCs are on the way, in all shapes and sizes,” Sinofsky promises.

Notes that it won’t have to be a trade-off of touch or mouse-and-keyboard. Can have both, or keyboard and mouse only, when you want it.

4:48 pm: Sinofsky starting to wrap up, it seems.

4:48 pm: Consumer preview in five languages — English, German, French, Japanese and simplifed Chinese.

Sinofsky is his trademark vague on timing, noting that the next milestone is the release candidate.

“We delivered the consumer preview just as we promised,” he said, noting that it was being downloaded almost immediately in more than 70 countries.

Coming up on the blog: System requirements and other details not offered up today.

And … that’s it.

RELATED POSTS:

• Tablets That Have a Certain Feel to Them
• A Lytro in Hand Helps Bring Mobile World Congress Into Focus
• Coming Soon: Phones That Learn to Rest When You Do
• Microsoft Won’t Support Some Business Features on ARM, but Will Offer “Windows to Go”
• Windows 8 Hits the Really Big Screen (Video)
• Microsoft Says Hola to Windows 8 Beta in Barcelona
• Microsoft Won’t Support Some Business Features on ARM, but Will Offer “Windows to Go”
• Google’s Schmidt Insists Android “A Real Operating System”
• Samsung’s Not Doing Well in the Tablet Market? You Don’t Say …
• Interview: Clearwire CEO Sees 4G Opportunities Where Rival LightSquared Stumbled
• RIM Exec: Developers Like Us Just Fine, Thanks
• Intel Announces More Phone Customers, Plans for Speedier Chips
• Mum on Own Phone Plans, Facebook Aims to Make Mobile Web App-Friendly
• Sony Insists It’s Not Just Playing Around When It Comes to Phones
• The Inside Story of Nokia’s 41-Megapixel Camera Phone: Five Years in the Making
• With Lumia 610, Nokia Aims To Take Windows Phone To a New Low (Price)
• Nokia’s Strategy Comes Into Focus in Barcelona
• HTC Introduces the One Phone It Hopes Will Help It Regain Footing (Well, the Several Phones)
• Sony Aims to Remake Name for Itself in Phones
• LG Shows Its Hand in Barcelona (After Already Tipping It)
• With Latest Galaxy, Samsung Looks to Project Its Android Lead
• Barcelona Subway Strike Averted on Eve of Mobile World Congress
• Complete Coverage of Mobile World Congress

]]> http://allthingsd.com/20120229/microsoft-says-hola-to-windows-8-beta-in-barcelona/feed/ 0 http://allthingsd.com/20120222/hp-beats-streets-lowered-expectations/ http://allthingsd.com/20120222/hp-beats-streets-lowered-expectations/#comments Wed, 22 Feb 2012 21:18:23 +0000 Arik Hesseldahl http://allthingsd.com/?p=176948 Hewlett Packard just reported quarterly earnings, and the results show that HP earned 92 cents a share on sales of $30 billion.

The EPS number exceeded the expectations of analysts, who had anticipated HP would report per-share earnings of 87 cents. But sales at $30 billion even were light of the $30.7 billion Wall Street had expected.

Sales of PCs fell 15 percent year over year with an operating margin of 5.2 percent. Consumer sales fell by 25 percent and corporate PC sales fell 7 percent, while sales on a unit basis fell 18 percent. HP had faced a tough quarter on many fronts. With the shortage in hard drives caused by the last year’s floods in Thailand sapping overall demand for PCs, sales have been tricky and it showed. Corporate demand was thought to be relatively stable, while consumer demand continues to be slow amid stiff competition from Apple’s iPad and a tough economy overall.

Tony Sacconaghi, an analyst with Bernstein Research, said in a research note to clients issued today that HP, despite being the world’s largest vendor of PCs, appears to have struggled more with the Thailand problem than any other vendor.

On the printer front, HP’s Imaging and Printing Group saw its sales decline by 7 percent with a shockingly low 12.2 percent operating margin, down from 15.4 percent in 2011. HP’s printer unit has significant long-term problems, not the least of which is the fact that people are generally printing less. At first blush, this appears to be a serious blow to a business unit that was once the pride of the company.

Enterprise servers, Storage and Networking saw a 10 percent decline overall. The Business Critical server business — the one involving servers running Intel’s Itanium chip, which is the subject of an HP lawsuit against Oracle — saw its sales decline 27 percent. Networking revenue was flat and everything else was down.

Software was a bright spot, but a small one. Sales were up 30 percent and services grew 108 percent, but again, that’s off a low base and nowhere near large enough to offset the troubles anywhere else.

HP’s guidance for the current quarter is also below the street consensus. HP says it sees earnings of 88 to 91 cents, versus the street forecast of 95 cents. There’s no change to the full-year EPS guidance calling for $4 a share in 2012.

HP shares are down by 19 cents, or less than 1 percent in after-hours trading as of 4:26 pm ET. It’s a mixed bag, so given Dell’s performance yesterday, it seems investors are willing to accept an EPS beat alongside a slight revenue miss.

That’s a quick look at the results. HP’s conference call with analysts begins at 2 pm PT. I’ll be dialed in and liveblogging the blow-by-blow.

Here’s HP’s statement:

HP Reports First Quarter 2012 Results
— First quarter non-GAAP diluted earnings per share of $0.92, down 32% from the prior-year period and above previously provided outlook of $0.83 to $0.86 per share
— First quarter GAAP diluted earnings per share of $0.73, down 38% from the prior-year period and above previously provided outlook of $0.61 to $0.64 per share
— First quarter net revenue of $30.0 billion, down 7% from the prior- year period
— Returned $1.0 billion in cash to shareholders in the form of dividends and share repurchases
PALO ALTO, Calif., Feb. 22, 2012 – HP today announced financial results for its first fiscal quarter ended January 31, 2012. For the quarter, net revenue of $30.0 billion was down 7% from the prior-year period, and down 8% when adjusted for the effects of currency.
GAAP diluted earnings per share (EPS) was $0.73, down 38% from the prior-year period. Non-GAAP diluted EPS was $0.92, down 32% from the prior-year period. First quarter non-GAAP earnings information excludes after-tax costs of $364 million, or $0.19 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
―In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,‖ said Meg Whitman, HP president and chief executive officer. ―We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.‖

Earnings highlights
Information about HP’s use of non-GAAP financial information is provided under ―Use of non-GAAP financial information‖ below.
Trends and regional performance
In the Americas, first quarter revenue was $13.2 billion, down 9% year over year and down 8% when adjusted for the effects of currency. Europe, the Middle East and Africa revenue of $11.7 billion was down 4% year over year and down 5% when adjusted for the effects of currency. Revenue in Asia Pacific was $5.2 billion, representing a 10% decrease year over year and down 12% when adjusted for the effects of currency.
Revenue from outside of the United States in the first quarter accounted for 66% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.1 billion, down 13% from the year-ago period, and representing 10% of total HP revenue.
Revenue in HP’s commercial businesses declined 4% year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 23% year over year.
Business group results
— Personal Systems Group (PSG) revenue declined 15% year over year with a 5.2% operating margin. Commercial client revenue declined 7%, Consumer client revenue declined 25% and Workstations revenue was flat. Total units were down 18%, with a 19% decline in desktop units and an 18% decline in notebook units.
— Services revenue of $8.6 billion grew 1% year over year with a 10.5% operating margin. Technology Services revenue grew 2%, Application and Business Services revenue was flat and IT Outsourcing revenue grew 2% year over year.
— Imaging and Printing Group (IPG) revenue declined 7% year over year with a 12.2% operating margin. Commercial hardware revenue was down 5% year over year with commercial printer units down 10%. Consumer hardware revenue was down 15% year over year with a 15% decline in printer units.
— Enterprise Servers, Storage and Networking (ESSN) revenue declined 10% year over year with an 11.2% operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11%, Business Critical Systems revenue was down 27% and Storage revenue was down 6% year over year.
— Software revenue grew 30% year over year with a 17.1% operating margin, including the results of Autonomy. Software revenue was driven by 12% license growth, 22% support growth and 108% growth in services.
— HP Financial Services revenue grew 15% year over year driven by an 8% increase in net portfolio assets and flat financing volume. The business delivered a 9.6% operating margin.
Asset management
HP generated $1.2 billion in cash flow from operations in the first quarter. Inventory ended the quarter at $7.3 billion, with days of inventory up 3 days year over year to 28 days. Accounts receivable of $15.9 billion was up 2 days year over year to 48 days. Accounts payable ended the quarter at $12.4 billion, down 2 days from the prior- year period at 48 days. HP’s dividend payment of $0.12 per share in the first quarter resulted in cash usage of $244 million. HP also utilized $780 million of cash during the quarter to repurchase approximately 29 million shares of common stock in the open market. HP exited the quarter with $8.2 billion in gross cash.

Outlook
For the second quarter of fiscal 2012, HP estimates non-GAAP diluted EPS to be in the range of $0.88 to $0.91 and GAAP diluted EPS to be in the range of $0.68 to $0.71.
Second quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
There is no change to HP’s previously provided full year fiscal 2012 outlook of non-GAAP diluted EPS of at least $4.00 and GAAP diluted EPS of approximately $3.20.
Full year fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.80 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
As part of its annual financial review process, HP implemented several organizational realignments effective Q1 FY12. To provide improved visibility and comparability, HP has reflected these realignments in prior financial reporting periods on an as-if basis. These realignments resulted in, among other things, the transfer of revenue within and among various financial reporting segments and business units. The changes do not impact HP’s previously reported consolidated net revenue, earnings from operations, net earnings or earnings per share at the company level. To reflect these changes, HP released modified quarterly and annual consolidated condensed statements of earnings, segment financial results and statements of business unit revenue for fiscal 2010 and 2011, which are available on HP’s Investor Relations website at www.hp.com/investor/home.
More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.
HP’s Q1 FY12 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2012Q1webcast.

]]> http://allthingsd.com/20120222/hp-beats-streets-lowered-expectations/feed/ 0 http://allthingsd.com/20120222/downgrades-a-plenty-for-dell-after-earnings-miss/ http://allthingsd.com/20120222/downgrades-a-plenty-for-dell-after-earnings-miss/#comments Wed, 22 Feb 2012 14:34:36 +0000 Arik Hesseldahl http://allthingsd.com/?p=176788 A day after Dell reported quarterly earnings that fell 18 percent, analysts are slashing their ratings on its stock today, which opened lower by nearly 7 percent as markets opened in New York.

Dell’s earnings were 51 cents and missed the consensus of analysts by a penny; the company also said that revenue would decline by 7 percent in the current quarter. In a note to clients today, Shaw Wu of Sterne Agee dropped his rating to “underperform,” the equivalent of a “sell,” arguing that Dell’s PC business continues to suffer at the competitive hands of Apple, Acer and rejuvenated Hewlett-Packard. “We are concerned with the company’s longer-term fundamental position and may face more difficulty making further operational improvements,” Wu wrote.

Richard Kugele, of Needham and Co. in New York, downgraded Dell to a “hold” from a “buy.” Rich Gardner of Citigroup also cut his rating to “hold” and dropped his target price to $19 from $20, citing declining prospects for improvements to Dell’s gross margin in the current quarter.

But the chorus of analysts wasn’t all negative. Chris Whitmore of Deutsche Bank, who last week suggested that, all things considered, Dell’s results might turn out “pretty good,” saw it differently. He blamed the ongoing shortage of hard drives brought on by last year’s flooding in Thailand and weak public sector buying, and still finds Dell attractive. The shortage, he says, was the primary reason that Dell’s gross margins — which came in at 21.7 percent — missed estimates. “Gross margins were light due to negative hard drive impact — shortages hampered the ability to sell richer high-end systems — and soft public sector results,” Whitmore wrote in a note to clients today. He maintained his “buy” rating.

Brian Marshall of ISI maintained his “neutral” rating. He wrote in a note today that Dell’s plan of shifting its revenue base away from consumer and business PCs and toward higher-value enterprise IT, software and services is going to take years. “We believe changing the composition of a $60 billion revenue base is non-trivial and takes years not quarters to successfully navigate. [We're] still scratching our heads on how earnings per share grows in 2012. … In the face of flat revenues, declining gross margins and continued operational expense growth, we struggle on how EPS will be up in 2012. We like the plan, just not the set-up.”

(Michael Dell photo by Asa Mathat)

]]> http://allthingsd.com/20120222/downgrades-a-plenty-for-dell-after-earnings-miss/feed/ 0 http://allthingsd.com/20120217/results-from-hp-and-dell-may-pretty-good-after-all/ http://allthingsd.com/20120217/results-from-hp-and-dell-may-pretty-good-after-all/#comments Fri, 17 Feb 2012 13:59:55 +0000 Arik Hesseldahl http://allthingsd.com/?p=175839 Probably the last thing you’d expect from Hewlett-Packard and Dell right now is a set of positive quarterly results, but that’s exactly what Deutsche Bank analyst Chris Whitmore is expecting from the two companies when they report quarterly results next week. (Dell reports Wednesday Tuesday; HP on Thursday Wednesday.)

Is Whitmore just seeing the world through some rose-tinted shades? After all, consider the state of the industry — PC sales are suffering generally from a prolonged case of iPad envy among the consumer set, the ongoing shortage of hard drives brought on by the flooding in Thailand, and a global economy that has Europe flat on its back, the U.S. recovering but wobbly, and every other region tenuous. Meanwhile, HP and Dell aren’t exactly their old selves.

And yet here’s Whitmore explaining his positive expectations from both, in a note to clients today: “Investors appear to be positioned for solid results from both HP and Dell as recent data suggests enterprise IT spending finished 2011 well. We expect IT spending to gain momentum through 2012 due to an improving US macro backdrop and forthcoming product cycles.”

Pretty good, relatively speaking. Whitmore goes on at length on each company. About HP, he says its recently lowered expectations — CEO Meg Whitman has designated 2012 as a rebuilding year — will be easy to beat. Revenue might even come in below expectations of $30.1 billion, but per-share earnings will probably beat the consensus of 87 cents. The reason? Corporate demand for IT hardware, specifically PCs and servers, remains healthy in the face of weaker demand for PCs among consumers — the iPad is sapping demand — and a weakness in sales of printers. Recent cost-cutting, favorable prices on commodity components, and other changes made in recent restructurings will combine to give HP a slight edge on the EPS front, Whitmore says.

That’s not to say there isn’t still some messy business yet to finish at HP. While its official guidance forecasting a per-share profit of $4 in 2012 still stands, there’s still the ongoing strategic question of addressing its weakness in the consumer PC business with a tablet that can take on Apple’s iPad. Also, results from Lexmark and Canon, Whitmore says, show continued weakness in the printer business, which will hit HP right where it hurts.

Then there’s the longer-term questions, like Whitman’s ultimate plan to save HP, and how the $10.6 billion acquisition of Autonomy is going to further that goal. “We believe investors will continue to focus on Meg Whitman’s long-term vision for HP and her efforts to revitalize HP’s growth strategy,” Whitmore wrote. “Specifically, an update on the integration of Autonomy, plans to reposition Services, growth plans for printing and its PC strategy are all important topics that need to be addressed.”

Then there’s Dell: As with HP, Whitmore says to expect soft results on the revenue side, but healthy profit margins and a decent upside to per-share earnings. Healthy demand from big companies should be offset by weaker demand from government clients and consumers. The consensus estimate has Dell reporting $15.9 billion in sales and 50 cents a share in earnings. Dell’s server sales finished strong in 2011, Whitmore says, and its customers tended to shift toward higher-priced, more profitable machines. He expects Dell’s gross margin to be 22.5 percent, up slightly from the 21.5 percent seen in the year-ago quarter.

He expects Dell to have a pretty good year, too: Modest growth in revenue should be accompanied by ever-better gross margins. Dell made some big investments in 2011 that added to operating expenses, and Whitmore expects the company to put those investments to work in 2012. As such, the $2.04 per-share profit that Dell has forecast for the year could prove conservative. He sees Dell reporting a profit of $2.20 for the year.

Correction: I initially got the days that Dell and HP are reporting their results wrong and have since fixed it. Sorry about that.

(Larry David image is on this T-shirt.)

]]> http://allthingsd.com/20120217/results-from-hp-and-dell-may-pretty-good-after-all/feed/ 0 http://allthingsd.com/20120213/seven-questions-for-arm-ceo-warren-east/ http://allthingsd.com/20120213/seven-questions-for-arm-ceo-warren-east/#comments Mon, 13 Feb 2012 14:26:25 +0000 Arik Hesseldahl http://allthingsd.com/?p=173935 It’s kind of hard these days to avoid an ARM chip. There are probably five or more inside your mobile phone alone, a few in your car, some in your PC, and several more in places you wouldn’t think of, like your coffeemaker.

Things are good for ARM Holdings, the British chip company whose designs are central to so many of the chips that make modern life modern. In 2011, some 7.9 billion chips with ARM cores in them were shipped. And yet it’s not a very big company. Where Intel clocked sales of $54 billion, ARM finished the year with sales of $777 million (491.8 million pounds). It all has to do with the differences in how they do business. ARM sells the blueprints to make a core — the central brain of a chip — and then those who buy that blueprint can build their own custom parts of a chip around it.

That means an ARM-based chip from Samsung can be significantly different from an ARM chip from Broadcom or Nvidia. And yet designers from either company could probably exchange jobs, because they’re both familiar with the basic designs. ARM has become something of a lingua franca of electronics design, except in the world of personal computers and servers. Yet with Microsoft set to release a new ARM-friendly version of Windows for notebooks and tablets, and the chip firm Calxeda working on bringing ARM chips to servers, ARM’s influence is growing.

I caught up with ARM CEO Warren East over dinner in New York last week, and we talked about how its business model is going strong, and where the ARM architecture is going.

AllThingsD: When people ask me what ARM is, I tend to liken it to a recipe for cake — a cake for which you buy the basic recipe, but which you can then enhance anyway you like. Is that a fair analogy?

East: Exactly, and the doing whatever you like is very important for our business model. If you couldn’t, and we were like Intel, say, and you had to do this one thing, the only thing our licensees could — if you were to apply a licensing model to that — the only thing they could use to compete against each other is price. Whereas this way, they can do their own stuff around the basic recipe, they can differentiate. But because it’s the same microprocessor architecture, your cake recipe, then investments they make in software, or if you’re using a combination of chips from Samsung and Nivida and Qualcomm, any investment you make toward using Samsung chips is equally applicable to the others.

And you can switch to another vendor later if you like, correct?

You can, because they all do different things. If your product is about video, then Texas Instruments’ video accelerator is very good. If it’s about 3-D graphics, then Nvidia’s chips are very good. If it’s a modem you need, then Qualcomm’s chip is very good. So you can mix and match.

And it’s not uncommon for many manufacturers, whether they’re making phones or something else, to have several ARM-based chips doing many things. In a phone, the main microprocessor will be an ARM-based chip, but then also the surrounding chips doing specialized functions will be ARM chips, as well, correct?

Right. The typical smartphone will have four or five ARM chips in it. There’s the main processor, the thing you interact with as the user. Then there’s the modem, which connects to the phone network. And then there’s a connectivity processor that handles the Bluetooth and the Wi-Fi or both. And then there may be a power management processor, or a touchscreen controller, a camera, or GPS, and so on. And the next one that’s being integrated is NFC, or Near Field Communications, for payments by phone. And your 8-bit processor in the SIM card is turning into a 32-bit microprocessor, and that will likely be an ARM, as well.

When you think about competitors, who is it? Is it MIPS? Is it Intel, perhaps, down the road?

When you think about the consumer electronics space, TVs and the like, MIPS has been very strong in that space. Increasingly, as the TVs become smarter and more connected then they start to look more and more like a smartphone with a 46-inch screen. And so, actually, the infrastructure that exists around ARM makes it very compelling to put an ARM chip in there. In the computing world then, the competition is really Intel and AMD x86 chips.

Speaking of AMD, its CEO, Rory Read, raised some eyebrows at its analyst meeting recently when he mentioned ARM and described a new “ambidextrous” approach to its chips, implying, many think, that AMD might combine its x86 cores in some way with an ARM core. Can you give any visibility into what he might mean?

We can’t tell you really anything about it. But I will say something that we’ve said about this before, when people had picked up similar noises about something like this. AMD is in the business of selling microprocessors. We’re in the business of selling microprocessor designs. We wouldn’t be doing our job properly if we weren’t at least talking to them. And so we have been, for the last 10 years or so. If those discussions go anywhere, and if and when there’s something to announce to the world, we’ll do so.

How many licensees are there? Are there any that surprise you because they’re unusual or unique?

Now there are 290 licensees. It’s a good question, and one we don’t get very often. There are all sorts of weird applications. There’s a glaucoma monitor chip that’s a cubic millimeter. It’s a pressure sensor, a solar panel, a microprocessor and a radio and a battery, all in that space, so it can be fitted inside the eye so you can be tested for glaucoma. On the other extreme, we’re in a neutrino detector that’s in a kilometers-long chain of sensors, with another sensor every few meters, down in the Antarctic. So we’re in applications that are as small as a cubic millimeter to as large as several square kilometers. Looking forward, one of the ones I’m intrigued about at the moment is with a company that makes concrete. The idea is it concerns networks of sensors that would be embedded directly in the concrete. But you get the feeling that one company is going to pour the concrete and another is going to place the sensors. But this company wants to put the sensors in in the first place. We’ll just pour the concrete with the sensors already there. It’s all about energy harvesting from the vibrations in the concrete. The processors come with little wireless communications [abilities], and use hardly any energy, because the communication is only from one sensor to the next. That one is probably a few years off, but the fact that a concrete company is thinking about this is very interesting.

The next big thing is that ARM chips are coming to traditional PCs running Windows. We’ve been hearing about it for more than a year now, and Microsoft is starting to show Windows 8. Is the opportunity for ARM in PCs real, and is it going to happen?

It’s real and it’s going to happen, and it’s absolutely on track. Obviously, the detailed timeline is a matter for Microsoft and not for us. Metro is happening. It’s a big change to the user interface. They have pioneered Metro in their mobile offering, and you can sort of see where they’re going with it. But Windows 8 is going to be about Metro. That lends itself a little more to tablets in a way that they haven’t been before. That is clearly going to happen. For us and for Microsoft there are two different objectives. For them, it’s about getting a route to support the billions of Internet-connected screens that are going to appear over the next decade or so. Most of them are going to have an ARM processor in them. Without Windows on ARM, Microsoft is excluded from those products, so they need Windows on ARM. For us, a great side effect is getting into the PC world where, outside of Apple, Windows is everything, and it has been inextricably linked to Intel and x86. So now if Windows appears on ARM, we can address those 300 million PCs that are sold each year. And for us, it’s like having an extra 300 million smartphones. It’s certainly nice to have.

]]> http://allthingsd.com/20120213/seven-questions-for-arm-ceo-warren-east/feed/ 0 http://allthingsd.com/20120203/hp-ceo-whitman-earned-one-dollar-plus-16-million-in-2011/ http://allthingsd.com/20120203/hp-ceo-whitman-earned-one-dollar-plus-16-million-in-2011/#comments Fri, 03 Feb 2012 15:27:02 +0000 Arik Hesseldahl http://allthingsd.com/?p=171099 Hewlett-Packard released its annual proxy statement this morning, which, among other things, gives a look at what its top five executives made last year. Here’s the rundown:

CEO Meg Whitman, who upon becoming CEO agreed to take an annual base salary of $1, received more than $16 million worth of stock awards. Add on another $372,598 in other compensation, and the total value of her package was north of $16.5 million. Much of that other compensation stemmed from the period when Whitman was a director on HP’s board, and before she was CEO.

Under her employment contract, Whitman received an option to purchase 1.9 million shares of HP stock at a strike price equal to the value of the share price on the date of the grant, and subject to vesting requirements over time. As of today, 1.9 million shares would be worth almost $55 million. Whitman, the filing says, was the only one among the company’s named executive officers to receive an options award during 2011.

The filing also shows that CFO Cathie Lesjak made a base salary of $825,000, plus $9.3 million in stock-based compensation, $679,000 in incentive pay and $101,500 in other compensation, for a total of more than $11 million.

Todd Bradley, executive vice president and head of the Personal Systems Group, the division that HP briefly considered spinning out last year, made a base salary of $850,000, plus $9.3 million in stock-based compensation. He received $464,457 in incentive pay, plus $105,000 in other compensation, for a total just shy of $10.7 million.

Vyomesh “VJ” Joshi, the executive president and head of the Imaging and Printing Group, got an $850,000 salary, too, and nearly $8 million in stock awards, plus $638,355 in incentive pay, for a total of $9.8 million.

Shane Robison, the former chief strategy officer who retired last year, received a base salary of $781,250, plus stock awards worth $7.6 million and $606,506 in incentive pay, for a total of $9 million.

Finally, we have a full accounting of what former CEO Léo Apotheker made for his 11 months of service at HP’s helm. The full amount was $30.4 million. The precise amount had been the subject of some guesswork based on less-than-complete HP filings made around the time of Apotheker’s departure. The filings netted for HP a dubious award for “Worst Footnote of the Year” over at Morningstar’s Footnoted blog. My best guess had been in the $28 million to $33 million range.

Apotheker’s compensation breaks down like so:

• $1,152,770 in base salary.

• A $6.4 million bonus, of which $4 million was a signing bonus when he joined HP, and $2.4 million paid under the terms of his separation agreement.
• Stock awards worth $17,660,759.
• $5.2 million in “other compensation.” Within that was $2.9 million in relocation expenses related to Apotheker’s move from France to California and back; $1.7 million in “miscellaneous,” the majority of which, as explained in a footnote, was a “reimbursement for foregone non-competition payments that would have otherwise been payable by his former employer,” which refers to the software company SAP, where Apotheker was co-CEO.
• Another $25,000 representing his personal use of HP aircraft.
  ]]> http://allthingsd.com/20120203/hp-ceo-whitman-earned-one-dollar-plus-16-million-in-2011/feed/ 0 http://allthingsd.com/20120120/seven-questions-for-bill-veghte-hewlett-packards-new-chief-strategy-officer/ http://allthingsd.com/20120120/seven-questions-for-bill-veghte-hewlett-packards-new-chief-strategy-officer/#comments Fri, 20 Jan 2012 15:25:03 +0000 Arik Hesseldahl http://allthingsd.com/?p=165843 Earlier this week, Hewlett-Packard gave Bill Veghte, its executive vice president for software, a new title: Chief Strategy Officer. The job has been vacant since Shane Robison retired last year.

  Veghte joined HP in 2010 after 20 years at Microsoft, where he managed the $15 billion Windows business and oversaw the launch of Windows 7. At HP, he has been credited with growing its software revenue by 18 percent last year.

  Given Veghte’s history as a software guy, his appointment to this role can’t help but be seen as a key signal by CEO Meg Whitman of the role she sees software playing in HP’s strategy going forward. That was one of the things I asked Veghte about when we spoke by phone earlier this week.

  AllThingsD: What, in your view, is the role of the chief strategy officer at HP, and what do you expect it to entail in the coming year?

  Bill Veghte: As we’re out talking to customers, they’d like to buy more from HP; they’d like HP to be more successful. They look at the advances we’re making in networking or storage or printers, but they want to know why the whole is greater than the sum of is parts. What is HP’s strategy for continued leadership in the market transitions that are going on? And some customers would say that where HP is concerned, that’s not a fully realized opportunity.

  And you’re coming at it from the software part of the business, and we’ve heard from Meg saying she’d like to grow opportunities in software. Your appointment, to me, sends a bit of a signal that software is going to be a big part of HP’s strategy to get things turned around. Is that accurate?

  I think, certainly, as I talk to Meg and Ray [Lane, HP chairman], and with the members of the executive committee, I’ve found that this is a catalyzing role. If done right, there are different models of strategy in different Fortune 500 companies. And the one that makes sense here is catalyzing with other business units. Whether that’s Vijay Joshi in printing and imaging, or with Todd Bradley in PCs, or John Visentin in the enterprise group, there’s a strategy that each one of those is trying, and which is accretive to a whole that is greater than the sum of the parts. And so, to the extent that software is glue or networking is glue, I think it’s a statement that has more to do with a pan-HP strategy than something that’s specific to software.

  What’s Job One, starting on your first day?

  Job One is making sure that as we have those conversations with customers, they see an HP that is unified around a set of constructs and offerings that deliver what they need. It’s different from having offerings that are, by themselves, individually great. It’s about having unifying themes and constructs.

  It seems that you’re talking about finding a way to routinely and thoughtfully combine different things that HP makes or does, in ways they aren’t being done now. Is that what you’re getting at?

  I think that very accurately characterizes the opportunity. When we talk to the leadership team, we hear a lot of the same thing. There is a lot of great stuff within HP, whether you get that in terms of market position, or IP, or people. I like how you put that: How do you routinely and thoughtfully combine things, particularly in light of the market inflections that are happening. We are in a tectonic shift, and that can be an opportunity, if you clearly spell out the value proposition for customers. Not only in each one of the units, but where you’re thoughtfully combining them so that the whole is greater than the sum of its parts.

  I thought of an example around meeting the needs of the market. There was an IHS iSuppli report out earlier this week about cloud servers, which are growing. But customers are going to Taiwanese ODM companies to get customized products, while at the same time cloud servers are growing generally. Is this the sort of thing that might affect HP?

  I was talking to Dave Donatelli [general manager of Enterprise Servers] about this recently. It’s interesting, because it seems like in more recent months it has flipped back, because of the integration within that customization. A great example that Dave and I have been working on is the whole cloud system piece. You’ve got a lot of great stuff in automation and orchestration software that is inherently cross-platform, and which crosses virtualization engines and marrying that deeply with the converged infrastructure. We’re the only company that can give you a single stack, soup to nuts, from a single vendor. The core construct is that there’s a lot of private cloud build-out going on, and those customers who are doing it are saying they don’t want to be the systems integrator for six different vendors, and they also prefer not to be locked in to a single vertical stack. That’s a huge advantage for us. And to your point about routinely and thoughtfully combining, we should do exactly that. It’s been doing well for us in the marketplace, but how do you make that routine against the opportunities we see in the marketplace?

  You spent about 20 years at Microsoft. How does that inform what you’re bringing to this job?

  At the core, any of these jobs are about identifying and exploiting market shifts for customers. I had the privilege of having a front-row seat during some big marketplace disruptions, and helping catalyze businesses and delivering superior market positions and solutions. It’s all about handling change, and turning it into an opportunity.

  ]]> http://allthingsd.com/20120120/seven-questions-for-bill-veghte-hewlett-packards-new-chief-strategy-officer/feed/ 0 http://allthingsd.com/20120119/who-says-intel-is-weak-just-look-at-those-crazy-numbers/ http://allthingsd.com/20120119/who-says-intel-is-weak-just-look-at-those-crazy-numbers/#comments Fri, 20 Jan 2012 02:00:21 +0000 Arik Hesseldahl http://allthingsd.com/?p=165707 Chipmaker Intel has grown its annual revenue by nearly $20 billion in two years. Let that thought sink in for a minute.

  In 2011, it crossed the threshold of $50 billion in annual sales for the first time, having hit the $40 billion mark only last year. This came after a tough year — 2009 — during which sales declined a bit to $35 billion, down from $37 billion in 2008. But the larger point is clear: Intel continues to be a significant growth machine in a tech ecosystem that is supposed to be on the decline.

  Who says so? “The experts.” Earlier this month, Gartner and IDC both reported what they described as the second-worst year for PC sales growth in recorded history, second only to the doldrums of 2001, when the world was beset by the dotcom crash, the onset of the global war on terror and general recession, all in one. This came after the same two outfits made similarly depressing predictions for worldwide IT spending.

  Intel’s results tell a different story. Consider its strengths: Sales in its data-center group — chips being sold to companies building servers that will be used to power data and applications running on the Internet — grew 17 percent year on year to north of $10 billion. And the lowly PC? The machine that is said to be on the decline by so many people who claim to know what’s going on? Sales in Intel’s PC client group grew by more than $5 billion year on year to north of $35 billion.

  How can that be possible? It’s an argument that Intel has been making for some time now, and is now becoming familiar: Persistent strength in emerging markets. As Intel CEO Paul Otellini said on a conference call with analysts today, emerging markets, where household incomes are improving to the point that consumers are able to buy their first PCs, are accounting for two out of every three units of incremental microprocessor demand. Which means that for every three chips of new growth sold in a year, two are sold in an emerging market.

  PC sales in China, by Intel’s reckoning, grew 15 percent, and as yet have only achieved a household penetration rate of 35 percent, which says there’s lots of room still to grow. By comparison, the U.S. market is 90 percent penetrated, meaning nearly everyone who wants a PC has one. India grew 22 percent; Indonesia, 37 percent.

  Here’s another really interesting metric that should give you some food for thought: In 2012, Intel will spend $12.5 billion on capital expenditures. That’s more than twice what it spent last year. What is it spending so lavishly on? Four new chip factories — in Oregon, Arizona, China and Israel — which, when completed, will turn out chips built on the very latest, edge-of-reality technology, where chips have transistors and other elements on them that are at the 14-nanometer scale.

  How small is 14 nanometers? About one-fifth the size of a typical virus cell, and only slightly bigger than the thickness of the cell wall of a typical germ. Next year, there will be four factories, employing thousands of people, turning out thousands — and later millions — of these miniscule fragments of silicon that arguably constitute some of the most complex implements mankind has ever built.

  And Intel does this profitably, which is so difficult and requires such financial scale that most companies that make other kinds of chips long ago gave up running their own factories and farmed the work of actually building them to other companies. Intel is so good at it that its gross margins in 2011 were 62.5 percent. Its full profit for the year was nearly $13 billion on $54 billion in sales.

  Yes, we beat on Intel for not having conquered the smartphone industry or the tablet industry as readily as it spent the 1990s bending the PC industry to its will. There is a school of thought that says Intel is less relevant today than it was, say, five years ago, and that its anemic presence in the future of personal computing — smartphones and tablets — is all the evidence one needs to render that judgement. In fairness, smartphones and tablets are still on the rise, and Intel is starting to show some promising progress, though its competition and an industry-wide preference for chips based on the ARM architecture will be difficult to dislodge.

  Still, it’s a little hard to find much fault with Intel, when the numbers so clearly demonstrate that, despite the conventional wisdom, it is clearly at the height of its powers.

  ]]> http://allthingsd.com/20120119/who-says-intel-is-weak-just-look-at-those-crazy-numbers/feed/ 0 http://allthingsd.com/20120119/liveblogging-intels-earnings-results/ http://allthingsd.com/20120119/liveblogging-intels-earnings-results/#comments Thu, 19 Jan 2012 22:32:27 +0000 Arik Hesseldahl http://allthingsd.com/?p=165627 Despite a significant supply chain disruption in the PC business, Intel has managed once again to surprise everyone with its luck in selling chips to PC and server vendors.

  The company’s profit climbed by nearly 6 percent in the quarter, despite persistent worries that demand for personal computers is down generally in the face of worldwide economic uncertainty, the popularity of tablet devices like Apple’s iPad, and smartphones in which Intel’s chips are not a significant factor.

  Yet, as has been the case for the last several quarters, Intel knows the demand for its global markets — specifically Brazil, Russia, India, and China — far better than any industry analyst, and its executives, especially CEO Paul Otellini, have seemed to enjoy bursting the bubbles of the IDCs and Gartners of the world, who continue to preach a catechism of PC doom.

  It’s important for the wider tech industry, because if Intel is healthy, it says a lot about the health of the rest of tech. If PCs are selling well, that means consumers and companies are buying them, either to replace new machines or buying a PC for the first time. And if PCs are selling well, then servers are selling well. Behind all that talk about cloud computing and cloud services are physical servers sitting in a data center somewhere, usually containing Intel chips.

  The earnings conference call is about to start, so we’ll get some better indications about how and why Intel managed to surprise the Street once again.

  2:35 pm: Ah, joining the conference call in progress. CEO Paul Otellini is speaking and, naturally, he’s crowing about Intel landing a chip in a Lenovo smartphone announced at CES last week.

  “In the first quarter, we completed the acquisitions of McAfee and Intel Mobile Communications, formerly of Infineon. They will allow us to extend our strategies across computing.”

  He’s recounting highlights of the past fiscal year. During Q4, Intel acquired Telap, which specializes in location-based technologies.

  Now he’s talking about a smartphone reference design, basically a board around which a phone maker can build and customize. In the reference design is an Intel Medfield chip. Also, a strategic relationship with Motorola Mobility. “While the Lenovo and Motorola designs are first steps, we’re not done making announcements in the space.”

  Now he’s talking about more chips for 2012. For example, 70 Ultrabooks are coming to market this year.

  2:39 pm: CFO Stacy Smith is speaking. Nice gross margins of 65.5 percent, which were in the high end of the range. That’s Intel’s speciality — efficiency.

  Smith: We saw a reduction of orders for microprocessors as a result of the Thailand flooding. The flooding didn’t affect sales directly, he says.

  Smith: Q1 revenue will be down a little more from the average seasonal decline, as the flooding will continue to affect sales.

  Smith: 2012 growth of revenue in the high end of single digits. Capital spending of $12.5 billion, in order to build a fancy new fab.

  Smith: We continue to see strong results in emerging markets, as increased incomes allow more people to afford PCs.

  Time for Q&A with the analysts.

  First question from Citi: He’s asking about gross-margin projections and revenues. What is the PC forecast assumption that underlies that?

  Smith: It will play out similar to this year. There will be some unit growth, and we’ll benefit from a rich product mix. The high single-digit number in perspective. Strip out some things from 2011, we expect it to come down, in part because of lower GDP growth, but we see the same kind of trends in 2012 that we saw in 2011.

  Citi analyst asks if the unit costs per chip are coming down.

  Smith: That’s a normal phenomenon as we ramp factories to a new process, and then the cost comes down over the course of the year.

  A question from Jefferies: As you get more success in the smartphone and tablet markets, I’m wondering if it’s your intention to get more chips up and down the stack, or is it different from PCs?

  Otellini: Our intention is to participate broadly in all three of those markets. In tablets, we’ll be well-positioned for that. Who knows where the prices go over time, but we’d use the advanced silicon integration capabilities that we have to drive the costs down. We’re coming in at the top of the smartphone market; we’re aiming at best performance and very good battery life. And the Infineon acquisition has given us a very good position in basic phones. They shipped about 400 million modems.

  Jefferies: Do they inherently carry more profitability than the PC processor business?

  Otellini: The other guys have lower margins. But we’ll get paid twice. We’ll get paid as the foundry, but also for the architecture.

  2:50 pm: Question from Bank of America: There were a lot of announcements on Ultrabooks from CES. Will they cannibalize notebook sales?

  Otellini: I have not seen this level of excitement since before Centrino, which was in 2003. Initially, you will see this will be a replacement of existing notebook sales. People will trade up. As we move through 2012 and into 2013 as Windows 8 machines roll out, you have the possibility or even the probability of many of those machines incorporating touch. At that point, the machines incorporate the best of both the PC and the tablet. I don’t know how that plays out, but we’ll be well-positioned.

  Question from JMP Securities: I know you don’t guide by segment, but what’s happening on the data center side of the business? And how does Romley change that? (Romley is a future server chip.)

  Smith: Let me do a higher-level look. The data-center business can be pretty lumpy, but on a secular basis, we’re pretty confident in the growth trends.

  Otellini: We’re seeing stronger growth for Romley than we saw for Nehalem at the same point in its lifespan, two years ago. Initially, it will not drive the same kind of replacement cycle that Nehalem did. It will drive replacement for high-capacity needs. I think this product is the most well-rounded in the genre so far.

  Question from Deutsche Bank: Overall, as we look at flood impact, how should we see that snapping back, and against the backdrop of the seasonality?

  Otellini: There are more moving pieces as I look out over the next 11 months. Our view is that the industry seems to be hitting the bottom of their output trough in Jan. and Feb. Everyone who seems to want to buy a PC has been able to. There are some stockouts in particular SKUs. You will see some compression of the supply chain. We think there is likely to be some refilling of the pipes in the second quarter, and into the third quarter. Or people will learn to live with leaner supply chains, which is always good for us.

  3:00 pm: Question from Goldman Sachs: What’s the incremental growth in capacity? And what is the initial assumption on factory loadings?

  Smith: Let’s talk about what’s driving the capital spending. $12.5 billion is a big number, but you have to take in the context of how our business has grown. Then it makes sense. I think my depreciation as a percent of revenue stays in a healthy range. In terms of the makeup of specific capital spending, it’s a two-year cycle as we’re building buildings. That part starts to come down in 2013. Buildings are depreciated over a longer period of time.

  In terms of factory utilization, we’re running full-out today. We’re just in the beginning of the 22-nanometer cycle. We took advantage of the flooding by taking some older equipment offline sooner than we would have otherwise. We’re selling every 22-nanometer unit we can get out there.

  3:06 pm: Totally missed the question from UBS. Sorry, UBS.

  Question from Credit Suisse about Ultrabooks. Are there any sort of milestones you expect — perhaps, say, percentage of total notebooks?

  Otellini: Starting with the mix. Core processors are about 70 percent of our mix, and that’s historically high for our premium brand. What we can’t yet predict is the mix between i3, i5 and i7. As we move toward the second half of the year, the mix comes down to i3. In terms of a target, our goal would be to exit the year with about 40 percent of consumer notebooks being Ultrabooks.

  3:11 pm: J.P. Morgan asks if Intel is going to continue to spend like a drunken sailor on capital expenditures and R&D.

  Smith says Intel is making some important investments this year, but they will come down from here.

  A question from Nomura: Android tablet sales seemed like a disappointment in 2011. What was the issue, and is there a reason to be more optimistic this year?

  Otellini: They were where I thought they would be, but I was below where others were. Until you get to Ice Cream Sandwich, you’re at a comparison with Apple’s iPad. The other part of that test is the Windows 8 tablets that are being queued up for production. I don’t think anything about the tablet market is settled yet. The jury is out on the long-term segmentation by form factor.

  Ew. Questions from Barclays are being turned back. Smith just won’t go where he wants them to go. Too granular.

  3:16 pm: Otellini: The data-center storage is not your grandmother’s data-center business of before. Back to lumpy data-center sales, when Facebook or Apple turns on a new data center. We’re seeing a change to the linearity to data-center sales. Expect more short-term lumpiness, but stick to the year-on-year growth.

  One more question to go. And it’s from Caris & Co. He’s asking about capex again.

  Smith: If you look at spending for capex in 2012, a historically large part of it is the four-factory model. From here, our capex will be a function of two things — the unit growth we see and the speed with which we bring our process technologies to the leading edge. We balance off those decisions as we go forward. With a big increase in units, we’ll spend the capex to support it.

  Caris: You’ve taken on some debt in the quarter, as you look for flexibility to buy back more stock.

  Smith: Our balance sheet supports taking on more debt, and we certainly have the capability of doing so. We’ve said in the past, our first priority is investing in the business. We bought McAfee and Infineon. We had a significant increase in dividends in 2011, and as a percent of free cash flow. We did take advantage of low interest rates and high-dividend yield to buy back a lot more stock.

  And that is the end of the call. Good night!

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