The decision will cost Kodak $90 million, as the company lays off staff and writes down the value of its consumer-printing assets. It also will leave the company even smaller as it works to emerge from bankruptcy protection sometime next year.

Read the rest of this post on the original site »

One expression of that strategy — and a controversial one at that — was the nearly $12 billion acquisition of the British software firm Autonomy, announced 13 months ago. HP ultimately didn’t spin off its PC business, but its acquisition of Autonomy stuck. Now it is firmly part of HP’s software business.

As CEO Meg Whitman struggles to turn HP around, software is still a key part of her plans. While Whitman has made no secret of her opinion that Autonomy needs attention, there are some solid bits of HP’s software business — like Vertica and ArcSight — that are showing significant promise, if only they could grow.

Finding a way to get them growing is the job of George Kadifa. In June, HP named him as executive vice president, head of the company’s software business and a member of its executive council. Kadifa knows a bit about the software business. He spent seven years as a senior vice president at Oracle, and then ran his own company, Corio, for six years, until it was acquired by IBM for $182 million in 2005. From there, he went to investment firm Silver Lake, where, as partner, he pushed portfolio companies to improve their operations.

Kadifa sat down with AllThingsD last week at the software unit’s new headquarters in Sunnyvale, Calif., for his first interview since joining HP. We talked about how he plans to fix its weaknesses, improve its strengths and make software a more sizable piece of HP’s overall business.

AllThingsD: George, you joined HP to head up its software business unit in June. You’ve reached the 100-day mark, so give us your assessment of where you see things now and where they’re going.

Kadifa: A lot of good things are happening. We’re at about $4 billion in revenue, so if you look at HP Software as its own business, we’re about the fifth- or sixth-largest software business in the world. We have a great customer base; having worked at IBM and Oracle and now HP, customers really like us, versus previous experience. And we have a lot of products. A lot of them we acquired rather than built in-house.

Among the recent acquisitions, Vertica is one where the consensus seems to be that it was a pretty good deal. Where do you see Vertica going in particular, and what sets it apart?

One is the technology, which we think is second to none. When you think about it, the idea of taking data in columns and then arranging it in a row fashion, it seems like sort of a trivial difference. But it’s really unbelievable what it gives you in terms of capabilities. Say you’re storing a thousand names, you’ve got first names and last names. Let’s say five of those guys are named Arik. Normally you’d store five Ariks in a column. But here, instead of listing the name five times, you make a note above it with a five, so you know the name occurs five times. Now when you search through that list it’s so much more efficient, it’s two or three orders of magnitude faster, which means it’s 100 to 1,000 times faster than classic relationional technology. It has turned out to be a real diamond for us.

Yet it’s a small diamond. Yes, it’s growing, but how do you get it to grow fast enough that it becomes a more meaningful part of HP?

It’s a fair question. What we started with was a business with revenue in the low millions. It wasn’t in the $100 million range in revenue. It was really a project with some customers. We took it, and now it’s in the middle-double-digit millions. I can see us getting to $100 million with Vertica in a very short period of time. And there’s no reason it can’t be a billion-dollar business.

Let’s wrestle with the situation at Autonomy a little. You just named Robert Youngjohns to run it. Unlike Vertica, the consensus here is that Autonomy was an expensive deal that hasn’t come close to meeting expectations yet. What do you see happening there?

We just had a two-day planning meeting with everyone from Autonomy, where we went through the current status and looked at where we’re heading. The key for us right now is to get fiscal year 2013 on track, and that starts Nov. 1, so we’re working on that right now. Basically, when you look at Autonomy, the core unit is the IDOL Engine, which is the unique capability of meaning-based computing. We’re going to double down on that. In our labs in Cambridge, England, we have 40 or 50 mathematicians writing algorithms. And we’re going to build a team here in the U.S. to productize it and create a platform around it, because it has that potential. Frankly, the way Autonomy was managed previously, they put a lot more emphasis into enabling applications, which was fine, but our belief is that there’s a broad agenda, which is creating a platform around meaning-based computing. So we will maintain those apps, but at the same time we’ll open up the capabilities to a broader set of players outside HP.

It sounds like what Autonomy was doing was growing by acquisitions and then creating a more vertical stack of applications prior to HP’s ownership, rather than taking a broader, more horizontal approach. It sounds to me like HP wants to make Autonomy more horizontal. Is the potential there?

You’re correct. And, yes, the potential is there. I asked Autonomy that very question about why they went vertical instead of horizontal, and the answer that I got was that it came down to a difference of culture between the U.S. and Europe. In Europe, they tend to make things complex in order to create more value. For example, they saw the IDOL engine as too complex to just give it to people. Instead they thought they should acquire vendors and then create value by enabling applications. Here we take something that’s complex and we ask how we might simplify it in order to give it more scale for a bigger market. So, some of that difference was cultural, and some of it was that I think they fell in love with these acquisitions. … We think Autonomy’s technology has broader implications. And to reach that potential, we have to open it up as much as possible. And we’re also working with other organizations inside HP — PCs, printers, servers — to basically produce additional synergies.

Are the teams ready and primed? Meg Whitman, your CEO, and CFO Cathie Lesjak have made no secret that, so far, they have seen Autonomy’s ability to respond to deals that had been teed up by HP as lacking. Is the structure in place to address that problem?

It’s not in place yet, but the situation has settled down somewhat. The processes are working. The reason is that initially we kind of left Autonomy alone, and then we tossed a bunch of deals at Autonomy. The initial plan was to keep it intact, have the HP salesforce bring in deals, and everyone would be happy. One problem is that there were too many deals, and second is that the deals weren’t well-qualified. So what we did next was put in place a management process around sales cycles at Autonomy.

There’s been a lot of turnover there. Obviously, the former CEO, Mike Lynch, left, but so did a lot of the people who worked with him. Does that hurt the institutional memory at all?

No. Basically we lost the top half-dozen people. And you always expect that with an acquisition, especially with people who have grown up as entrepreneurs and will always be entrepreneurs. The remaining people running the products lines are still around, and so is the salesforce. The development guys in Cambridge and Chicago are still there.

Michael Dell has basically said he intends to keep growing his company by acquisition. Your boss, Meg, has said that we can expect no major acquisitions for the forseeable future — at least until the balance sheet is in better shape. If there were going to be acquisitions, even small ones, I would imagine they’d more likely be in software. Is that a fair statement?

I don’t want to say anything on Meg’s behalf. From a software point of view, if there are tuck-in acquisitions that can help us develop our technology, I’ll go and request to do it. The cash we generate from software would cover us. So that’s the thinking right now. We need to learn as a business how to grow organically because that’s where all the value is. At Silver Lake we did analysis on companies that grew by acquisition: Oracle, SAP, Microsoft, IBM, EMC and others. You find that their revenues grow and their profits grow. But what doesn’t grow, and what actually shrank from 2006 to 2011, is their multiples. Their valuations multiples shrank. What the market is saying is that just making acquisitions doesn’t add any value unless they create organic growth. That is how we look at it here. We’ve done a ton of acquisitions, so the task now is to create more organic growth because that is what the market will value.

The company said Tuesday that it will sack 1,700 employees worldwide and shutter a factory in the Philippines, as it explores selling off its inkjet printer operations. The move is expected to save Lexmark $95 million annually and free up more resources, as it focuses its efforts on higher value managed laser imaging services.

Shares in the company are trading up nearly 13 percent on the announcement.

The good news is that earnings, at $1 on a per-share basis, will be slightly higher than had been previously expected. The bad news is that those earnings will count only on a non-GAAP basis, because HP intends to take a combined $9.5 billion to $9.7 billion in charges this quarter, the most in its history: $8 billion for a writedown in the value of its IT services unit, the company formerly known as EDS; and $1.5 billion to $1.7 billion for restructuring charges associated primarily with the voluntary retirement and firing of some 9,000 HP employees.

The job reductions are only the first round of an expected 27,000 cuts that will occur between now and 2015. HP CEO Meg Whitman has said the restructuring is needed to get HP down to a size where its longer-term business prospects are more tenable.

However, the pressures on its many lines of business are numerous and intensifying. If the results that rival Dell reported yesterday imply anything, it’s that the state of the personal computer business, of which HP remains the global leader — though only by a whisker — is dismal.

Revenue from Dell’s PC business fell 14 percent, and its consumer business took the bluntest part of the blow, falling 22 percent from the year-ago period. HP may fare better, but only slightly so, says analyst Chris Whitmore of Deutsche Bank in a note to clients earlier this week. The consistent popularity of Apple’s iPad continues to eat into notebook sales, Whitmore says, while those still in the market for a new PC are waiting for Microsoft to get Windows 8 into the marketplace. “Looking ahead, we expect summer PC shipments to experience a slowdown ahead of the Windows 8 release, expected this fall and improving into the holidays with Win 8 related inventory restocking,” he wrote.

But PCs aren’t the only trouble spot for HP. Results from Canon, Lexmark and Xerox all point to a weak market for printers and printer supplies.

Then there’s servers and storage. Ongoing uncertainty in HP’s Business Critical Server business, brought on by the continuing legal fight with Oracle concerning the Intel-made Itanium chip, is hurting not only the sales in its high-end Integrity line of servers, but the associated service and support fees that HP collects from customers who buy them. Whitmore reckons that HP has lost some of its share of this specialized market to IBM. Meanwhile, sales of mainstream servers are also thought to have declined, as well, while in storage, EMC and NetApp are also thought to be taking business from HP.

If all that weren’t enough, there’s the vexing problem of HP’s services business: The writedown of EDS is only the first step in a long, complicated process that is intended to turn that unit toward a smaller number of more protein-rich, profitable contracts, and away from more numerous less-profitable ones. As Whitmore put it: “We expect these programs to take considerable time to develop and market. Increasing the size and depth of HP’s Services bench will likely take multiple quarters before translating into improving market share performance. As a result, we continue to expect a long, slow turnaround in EDS.”

On top of all that is the bitter frosting of the world economy. HP does more than one-third of its business in Europe, where the weakness of the euro versus the U.S. dollar adds additional headwinds that have only gotten worse since last quarter. And it’s unlikely to get better anytime soon, Whitmore says: “If the recent strengthening of the U.S. dollar is maintained, year-on-year revenue compares will continue to be a meaningful headwind in future quarters.”

See you later today.

Anyway, today we were reminded, again via a memo leaked to The Verge, that there’s still another mobile group within HP, and this one, unlike Gram, will be building hardware.

In the memo, Todd Bradley, head of the Printing and Personal Systems Group (PPSG), which encompasses the world’s biggest manufacturer of both PCs and printers, announced the creation of a new Mobility Global Business Unit that will operate within PPSG, and named Alberto Torres, the former head of Nokia’s abandoned MeeGo smartphone operating system efforts, to run it.

I’ve confirmed from sources that the memo is authentic, and I’ve also gotten one bit of clarification for anyone who may still be confused. Torres (pictured from a video interview conducted last year), whose title will be senior vice president of Mobility, will report to Bradley and will not be working for Gram. Also, the Mobility GBU has nothing to do with Gram. Got it?

So now HP has one mobile group working on an open source operating system with an uncertain mission, and a hardware group that will be building tablets primarily running Windows.

In case you haven’t seen it yet, here’s Bradley’s memo announcing everything.

As the world’s largest PC and printing business, we make it matter for hundreds of millions of people each and every day. Today we are taking an important step to serve even more customers in new and exciting ways.

I am pleased to announce that we are creating a team dedicated to delivering the best mobility solutions in the industry. With this move, we are building on our commitment to re-invest in mobility via dedicated leadership, focused research and development, amazing new products and a growing suite of applications and services.

Our new Mobility Global Business Unit initially will focus on consumer tablets and will expand to additional segments and categories where we believe we can offer differentiated value to our customers. Our existing notebook teams, including our soon-to-be launched commercial tablet, will remain within the PC GBU under James Mouton at this time.

To lead the Mobility GBU, I am thrilled to announce that we have recruited a proven executive from the mobile-device industry. Alberto Torres, who most recently oversaw the MeeGo products and platform at Nokia as Executive Vice President, will join HP as Senior Vice President of Mobility, reporting to me.

I am excited to have Alberto join us. During his seven years at Nokia, he held a variety of critical leadership positions, including two years on the company’s Executive Board. In earlier roles at Nokia, Alberto ran the company’s premium brand, its accessory and CDMA businesses and corporate strategy. Prior to Nokia, he was a partner at McKinsey and Company, where he worked with industry leaders in mobile devices, consumer technologies, software and Internet services. A Ph.D in computer science from Stanford University, Alberto currently holds vice chairman roles with the firms Bang & Olufsen and Opera Software.
Alberto’s first order of business will be to accelerate our tablet strategy and begin to execute products against our consumer/SMB target. The exact structure of his team will follow that strategy.

Alberto’s start date will be September 3. Please join me in welcoming Alberto to HP and in supporting him and his team in their important work.

Regards,

Todd

Neil Sedaka or Jack Johnson? Honestly, this is all beginning to sound a little too much like a bad mix from a lite-FM radio station. But here it is: Should Hewlett-Packard be broken up into parts, or should it stay together?

It’s an old question, dating back more than a decade, but it was raised anew today in a note by analyst Steven Milunovich at UBS Investment Research. His vote: Break it up.

Milunovich initiated coverage on HP today, after a break of several years, opening with a “sell” rating and a price target of $16, which would amount to a drop well below its current 52-week low, and would represent the lowest price that HP shares have seen in nine years. He then prefaces his argument with a history lesson: Way back in 2002, HP, under then-CEO Carly Fiorina, closed the $25 billion acquisition of Compaq Computer. Within a few years, HP leapfrogged Dell to become the largest PC vendor in the world, but the deal also gave HP some key assets it was missing in the enterprise hardware world. “Although historians likely won’t be kind to the merger, it’s not clear that HP would have been better off without Compaq,” he writes.

By 2004, Milunovich was arguing that HP should break itself into two companies: One focused on the enterprise, the other on consumers. On the enterprise side of the house, HP’s best course of action, he thought then, was to become an alternative to IBM.

No such breakup occurred, and now, 10 years after that enormous acquisition, HP finds itself “stuck in the muddy middle.” Of course, one CEO — Léo Apotheker — sought during his 11-month tenure to spin off the PC division; though, when combined with the costly $11.7 billion acquisition of the British software firm Autonomy and three consecutive quarters of results that came in below expectations, it wasn’t long before he was pushed out of his job.

New CEO Meg Whitman quickly undid Apotheker’s plan, arguing that HP is “better together,” a view she reiterated to AllThingsD in an interview in June. Instead, Milunovich argues, they might be “smart apart.”

With the printer business, a onetime cash cow now in a state of possibly permanent decline, and with PCs under attack by slowing growth generally and tablet substitution in the notebook business, HP’s strongest suits lie in the enterprise: “If HP is able to take advantage of cloud and big data trends, it should see modest revenue growth and margin expansion in ESSN, which is critical to offsetting the likely deterioration in printing,” he writes, referring to the old Enterprise Server, Storage and Networking group. A boost in software revenue would also boost profit margins.

And with HP shares currently trading at about four times estimated earnings for both 2012 and 2013, he compares its different segments and concludes they would trade at higher prices relative to competitors. The PC and printer groups could trade at six to seven times forward earnings; software and enterprise at 10x and services at 11x. Basically, break it all up and it could be worth between $27 and $34 a share, Milunovich writes.

But is it really that easy? The primary reason that Whitman gave for undoing the plan to spin off PCs was that HP’s scale alone gives it the ability to negotiate aggressively with suppliers of components used in other parts of the business. But she has also praised the unit’s overall return on invested capital. And there’s also a big batch of savings expected from this year’s combining of printing and PCs under Todd Bradley.

Much of it is a matter of time. Shareholders seem willing to give Whitman a certain amount of time to get the turnaround she has promised under way, and she has even taken to managing expectations by saying it will take years to get done. But if HP’s share price doesn’t respond, they may get impatient and start demanding a breakup. As Milunovich puts it, it would be interesting to see an activist investor like Carl Icahn or Bill Ackman get involved, though HP already has one of those on its board — Ralph Whitworth — and he has a history of lobbying for corporate breakups.

For now, it’s all an academic discussion. Whitman has made zero moves toward any kind of a breakup, and is clearly in the “better together” camp. My prediction is that Milunovich’s argument today is the starting gun to a broader discussion about how best to fit HP, and that the calls for a breakup are only going to get louder.

What tipped me off is the price of an obscure financial instrument known as a credit default swap. You may remember them from such hits as the great mortgage meltdown of 2008. While these credit default swaps have no connection whatsoever to mortgages, they do the same thing as the swaps did in that case: They serve as insurance.

When a lender worries about the likelihood that he’s going to get repaid, he can buy insurance against the chance that the borrower defaults. That’s essentially what a credit default swap is. You buy one, and if the borrower defaults, you get paid. If the borrower doesn’t default, whoever sells the swap pockets the fee, just like an insurance company. It’s a decent business, and there’s a thriving market for credit default swaps on all kinds of debts.

Anyway, last week I pulled some data showing that the price to buy this protection on HP’s debt has gone up — way up — since this time last year. In industry shorthand, the price to buy protection on $10 million worth of HP debt for five years has been “blowing out.” (Hence the movie poster from the forgettable 1981 John Travolta movie.) Protection a year ago that cost $65,000 has gone up to $325,000, while prices on the swaps covering debt on IBM and Oracle have stayed more or less flat.

And while it has no direct bearing on HP’s finances or operations — credit default swaps are derivative instruments — they do serve as an important barometer of the mood of bond markets that trade in debt. If the price to insure against the possibility of a default, however remote, is rising, the cost to take out new debt by issuing bonds can increase, as can the cost of refinancing existing debt. And when you consider that HP has a net debt burden of about $21 billion, a small increase in the costs associated with financing it can have a direct effect on operations.

Apparently I was on to something. It turns out that the “blow out” isn’t just happening to HP’s debt, but to debts held by Dell, Xerox and Lexmark, too. Today, The Wall Street Journal’s Rolfe Winkler looked at all three and saw similar pricing trends. The most extreme case was at printer maker Lexmark, where the cost of swaps on its debt have tripled to $590,000.

At a moment when other once-solid tech companies like Nokia and Eastman Kodak are in distress, more people are betting on — or insuring against — the possibility that HP, Dell, Xerox and Lexmark end up like them.

But another metric related to HP has in recent weeks started setting record highs. Prices on credit default swaps on HP’s debts have started to rise substantially, or, as pros in the corporate debt world like to say, “blow out.” The chart below shows the price progression since last July on credit default swaps for HP, IBM and Oracle, and you can see the striking disparity.

Now, without going too far into the weeds of corporate finance and debt (I wrote last month about the swelling debt on HP’s balance sheet), it’s important to understand what a credit default swap is and is not. Essentially, it’s insurance that you buy on a debt you hold to protect you against the possibility that the original debtor — in this case, HP — may default. The price of the swap was five times higher yesterday than it was at this time last year. As of yesterday, it cost $325,000 to insure $10 million of HP debt for five years, up from about $65,000 a year ago, according to data from Markit Group, which tracks the daily prices of credit default swaps.

It’s important to be clear on one point: No one is suggesting that HP is in any danger of defaulting on any of its debt. But for those holding HP bonds, the price of protection against that eventuality — however remote — is getting higher by the day.

And while the price of credit default swaps are mainly a barometer of the state of anxiety over its finances and its balance sheet, they can have the side effect of increasing the overall cost of HP’s financing activities and ultimately affecting its share price.

The pace in the increase of swap prices quickened last week following a perfect storm of bad news: There were lousy earnings reported by printing concerns Lexmark and Xerox, the apparent threat that HP may lose a key IT services contract at General Motors, and word that institutional investor James Chanos is shorting HP shares. The state of global PC sales in the second quarter and the disclosure that China’s Lenovo is drawing nearly even with market leader HP didn’t help.

Also consider this: HP has issued more than $10 billion worth of bonds reaching maturity in 2013 and 2014 on top of another billion and change maturing this year.

Typically, a company like HP can roll this debt over into new bonds relatively easily. But here’s the rub: HP’s credit ratings have slipped in recent months, increasing the cost of borrowing money generally. With less than a month to go before HP reports earnings for the quarter ending in July, no wonder people are getting nervous.

Note to the graph below: While the figures are given in dollars, the price is actually in hundreds of thousands of dollars. So yesterday’s price of $325 is actually $325,000, the spot price to buy protection against the loss of $10 million in debt.

(Thanks to AllThingsD’s Beth Callaghan for help with the chart and to The Wall Street Journal’s David Reilly for the quick lectures on the finer points of credit default swaps.)

On Friday, HP shares set yet another ignominious milestone, hitting $18.98 a share and trading at the lowest levels seen since late 2004, falling nearly 2 percent on a day when the Dow Jones Industrial Average rose by more than 1.6 percent.

The fall came in partial reaction to an earnings warning from printer company Lexmark, which slashed its second-quarter sales and profit forecasts, blaming slackening demand in Europe and unfavorable currency conditions. Lexmark shares fell by more than 16 percent.

Naturally, investors worried that a bad market for printers would have to hurt the world’s largest maker of printers, as well. It’s certainly not an unreasonable conclusion: HP’s printer unit — recently combined with its PC unit — accounted for 20 percent of sales and 36 percent of operating profits last quarter. And it’s not as if the indications for the printer business weren’t already dour. HP has struggled with its own version of currency difficulties: Since many key printer components are made in Japan, the strong yen has continued to add a currency headwind to an already challenged market for printers and printing supplies.

A pronounced weakness in the printing business is one thing, but there were other alarm bells. Last week’s PC sales figures from Gartner and IDC suggest that HP’s PC sales fell by about 12 percent and change, with a lot of market ground given to China’s Lenovo. Not good for the world’s leading PC vendor.

Add to that sales of HP servers — HP is the world’s leading vendor in that market, too, which fell by nearly 10 percent in the first quarter, according to Gartner and IDC — and the case for optimism has dwindled substantially.

Attention then necessarily turns to HP’s major shareholders, and one in particular: Ralph Whitworth, the activist investor and head of Relational Investors, LLC, a San Diego-based investment firm with about $6 billion under management.

Whitworth (pictured) took a seat on HP’s board of directors in November of 2011 after disclosing that Relational had acquired about 17.3 million shares as of Sept. 30 amounting to nearly 1 percent of HP’s outstanding equity.

Since then, Whitworth has been buying a lot more HP shares: As of June 1, SEC filings (see the most recent one here) show that Whitworth, through Relational, has doubled his holdings in HP, and now controls more than 34.5 million shares, a stake that is approaching 2 percent of the shares outstanding. That would put Relational on track to be the eighth-largest institutional holder of HP shares. In short, you have to go pretty far to find an HP shareholder with more skin in the game than Ralph Whitworth.

And there’s no way that Whitworth can be happy with HP’s performance of late. In May alone, Relational spent more than $407 million accumulating HP shares, at average prices ranging from $22.02 to $22.71. All told, Relational has, since last August, spent more than $790 million — or more than 13 percent of the funds it has under management — on HP shares that as of Friday were worth less than $656 million, representing a drop in value of about 17 percent.

This all makes Whitworth’s voice in HP’s board meetings all the more weighty. As a condition of taking the board seat, Whitworth agreed not to publicly seek HP’s sale or merger with another company or a spinoff of any of its assets. Whitworth will no doubt have other levers to pull. And nothing in the agreement forbids him from arguing for any course of action behind the closed doors of HP board meetings.

At this point, it’s worth looking at Whitworth’s history: Last June, after acquiring a 6 percent stake in L3 Communications, Whitworth pushed for a breakup of that company. The result was the spinoff of a $2 billion unit that is to be called Engility.

Also in 2011, after amassing a stake of nearly 4 percent, Whitworth pushed for — and ultimately won — the breakup of the industrial conglomerate ITT. In that case, Whitworth threatened a nasty proxy fight by nominating himself and two other Relational officers to that company’s board. It ultimately broke itself into three publicly held pieces: ITT, ITT Excelis, and Xylem.

Whitworth’s latest target appears to be soft-drink giant PepsiCo. Having accumulated a stake amounting to about 0.6 percent of its shares outstanding, he is said to have agitated for the separation of its slow-growing beverage business from its faster-growing snacks line.

His biggest coup was at Home Depot, where he pushed the company to get out of the commercial building-supply business, which ultimately led to the resignation of then-CEO Robert Nardelli.

These examples of Whitworthiana are notable in light of J.P. Morgan analyst Mark Moskowitz’s July 13 note to clients arguing that HP should indeed break up: As Barron’s noted that day, Moskowitz thinks HP will have to reinvest cost savings from the combination of its printer and PC divisions into the reengineering of its business model.

Moskowitz goes on: If HP’s strategic intent is to build up its enterprise IT solutions business, PCs and printers become less integral. Naturally, this brings to mind last August’s disastrous plan to spin off the PC-making personal systems group, a decision that, combined with the $11.7 billion acquisition of Autonomy, cost then-CEO Léo Apotheker his job.

Apotheker’s successor, Meg Whitman, quickly killed the spinoff plan after assuming the CEO slot, arguing that the PC business gives HP the scale it needs to compete effectively in other hardware businesses, including servers and printers. But given the growth prospects of both for the forseeable future, the pressure to carve HP up into parts will only grow.

But make no mistake: It’s an idea that Whitman firmly opposes: In a June 5 interview with AllThingsD, she reiterated her opinion that HP is strongest in its current sprawling form: Asked if she saw any scenario where a piece of HP was cut off from the whole, she was abundantly clear: “As I see it, everything stays,” she said at the time.

One has to wonder if, given his history of agitating for sweeping change at so many large and troubled companies, HP’s newest director and eighth-largest shareholder sees it in quite the same way.

For one thing: Once the legal trial with Oracle is concluded, one way or the other, she’d like to see HP and Oracle work together again, even though she conceded that the damage done to HP’s Business Critical Server business is hurting HP. She also said that HP will create a version of HP-UX, its version of Unix that will run on Intel’s mainstream server chip known as Xeon.

For another, she will not accept a job in a Mitt Romney White House in the event one might be offered. To do so would be to leave HP too soon at a moment when, more than anything, it needs consistent leadership.

Additionally, she doesn’t see a scenario where HP would spin off any piece of its operations, because in her mind they all fit together.

Below is a transcript of our conversation in its entirety. And while I realize it’s a long read, I thought it was important to let Whitman address every question I had for her completely. As you will see, we covered a lot of territory, because, well, there’s just so much territory to cover.

AllThingsD: Today’s message was long on what HP is about and less about specifics. There was the new marketing slogan “Make it Matter.” Hearkening back to your days running consumer branding for Procter and Gamble, can you walk me through what you think the new message means?

Whitman: When I came to HP, I was remarkably impressed with the assets that it has, and the people who are here. The crown jewel of the company is its people — it’s remarkable — and what they have lived through would have created far more disruption at other companies. As I began to understand HP, I said that it hasn’t been very good at telling its own story. Every CIO I talked to today — and I have a room full of 160 CIOs over there — when they walked through the showroom floor after today’s keynote, said they had no idea as to the breadth and depth of everything that HP does. And these are our best customers and they did not know. So I thought we needed to tell our story better. And when you start a marketing campaign, you always start with the authentic truth about the company because you have to be able to say something that no one else can say and that’s authentic about the company. So we got the 50 marketing executives in a room and started to think through what is unique and different about the company and we came very quickly to “Make it Matter.” Because in fact what we do makes it matter. It matters to the International Space Station or the Department of Works and Pensions or the U.S. Navy or Alianz or Deutsche Bank or Facebook. It matters what we do. Our people take great pride in that. And it’s also true that HP will do anything for its customers. If you get into trouble, we will darken the skies. That seemed to be the authentic thing that we could say.

And how will we be seeing this message in HP marketing?

All the business units will tuck under that messaging. So you will see it around PCs and printers, and in servers and storage and networking, in the storage business. Sometimes it will be digital, sometimes it will be print, sometimes in social media, sometimes on TV. Corporate wide, everyone will tuck under that message.

Does the HP brand need major rehabilitation and repair or more of a polishing?

I think we need to tell people what we do, so I think that’s more of a polishing, to tell people what we do. In my view we just need to tell people who we are, what we do and the value that we bring. And I think the other thing about HP is that this is not about the network or the database. It’s about our customer. This is something that I bring to HP, because I’m not an enterprise salesperson. At eBay I was a customer, and so, I think we can be completely differentiated by saying it’s not our agenda, but your agenda. And I think that’s very authentic to HP.

Let’s talk about the restructuring process that you announced during the last earnings call. You said on CNBC the next day that you thought the restructuring process was by that point about 10 to 15 percent complete. You announced that you’re going to cut about 27,000 jobs, so then I wonder what you think is the next big step in that process? What’s the next big hurdle that gets you to, say, 20 or 25 percent complete?

I would say this is a journey of decisions that need to be made and of strategies that need to be laid out. If you go back to when I took over, I made the decision about the PC business, I made the decision about WebOS. I recognized that we needed a strategic realignment to remove complexity from the business, so I combined PCs and printing under Todd Bradley, moved the Global Accounts sales force to Dave Donatelli, combined our sales organizations — we had two huge sales organizations under John Hinshaw — and then unified marketing and communications, all with the objective of making it easier to sell, easier to buy from us, and easier to get work done at HP. Then we all recognized that we needed to have the financial capacity to invest in the business. The way we were headed it was not going to happen, it was unsustainable. And we have a cost structure that we can no longer afford, so we took the very tough step of addressing how we can do things more effectively. And it’s never easy to reduce the workforce by 27,000 because it disrupts peoples lives. But in my view we couldn’t afford to wait to make the needed investments to set HP up for the next five years.

Is cutting 8 percent enough? Some thought the cut wasn’t large enough.

I think it’s about the right size. You never know for sure, but we’re taking the very best analysis that we can. I will say something about HP: When this company set its mind to something it brings to bear deep analytics, and so when you know what you’re doing you know why because they just get after it in a very deep analytical way. When we weighed the PC spinoff, we spent 30 days on it, and it was like, ‘alrighty, then.’ And this was the same in many ways. Once we knew, we decided to go forward thoughtfully. So we’re also tacking cost structures around supply chain and SKU reduction, and simplifying the overall organizations. So I think you’ll see us execute against this for awhile. We’ve got to deliver the savings, we’ve got to restructure some of our business processes and we’ve got to make it easier to do business with us. So now we’ve got a strategy, we’ve got the mechanism. Now we’ve got to execute.

Execution is a word I often hear described as a specialty of yours. What do you do to get people to execute?

I think you get results from what you measure, so what I measure is really important. At a company this big you have to have a cadence around that measurement and around the dialogue with your business units. It starts with my executive team. And I think I have the right people on the right jobs at the right time. And now it’s a matter of holding ourselves accountable. And that doesn’t mean there won’t be challenges and problems, but once you’ve identified the problems and a way to fix them you have to measure the progress. This was something I learned very early and was a hallmark of how I ran eBay and how I think I did well at P&G and Disney. But at the same time, you have to identify the pockets of creativity and where to invest, and that’s just as important as how you capture value. Once you save all that money the question is what do you do with it? We better make sure we put it in initiatives that have a high return on invested capital. You can’t do everything, and you can’t give everyone a little. You have to give a small number of people a lot.

So, about the investments you’re going to make. You talk often about a renewed focus on services. This question comes from a former HP employee. You said today in your keynote remarks that about 70 percent of HP’s sales come from infrastructure or what I would call hardware. And yet you talk often about services. Given those two choices, which do you think is more likely to save HP? Selling more boxes and things or selling more services?

Let me reframe it for you. It’s about optimizing our existing set of businesses to perform as best as they possibly can. They’re not. Revenues are down 7 percent and earnings are down 21 percent year on year so we have to get our core businesses, all of them, optimized and functioning really well. And then we have to position ourselves to take advantage of the bigger changes in the technology industry. I’m a big believer in focus. So as we thought about the pan-HP initiatives we might have picked, we went with cloud, security and information optimization. There were others we might have picked. But I thought about what we do well, what we already have, and what we can deploy against some of these bigger shifts in the industry.

So on focus — I’m wondering about the similarities and differences of what IBM went through. It spun off several things like PCs and printing and hard drives. And yes, the circumstances are very different and yet there’s some thematic similarities. When the PSG spinoff idea was floated, it was immediately compared to IBM. Do you envision getting rid of any peice of HP or do you plan to keep the whole thing? Are there some peices that are not core?

No. As I see it, everything stays. Each of the pieces fit together. They are very big and significant businesses in their own right. The PC business is at $40 billion and number one in the world. Not long on operating margins but because of the way its engineered, it has almost an infinite return on invested capital. You gotta love that business.

Let’s talk about two messy pieces of business, if you don’t mind. First is Autonomy. It’s the one thing that’s still lingering from all the announcements of last Aug. 18. The former CEO Mike Lynch is leaving HP. You’ve said that company delivered some disappointing results. What happened there and what does success at Autonomy look like in your mind?

In my view, this is the classic case of scaling a business from start-up to grownup. Going through that barrier of a billion dollars in sales is not easy because you can’t run the organization at $1.5 billion the same way you did at $500 million. You just can’t. And for many entrepreneurs, processes and discipline are dirty words, and you have to have those things, especially within the context of HP. I know exactly how this world [works]. My view was that we needed to make a change to someone who can take Autonomy to the next level. I have every confidence that Autonomy will be a very big and very profitable business. It’s taking advantage of a big shift in the industry toward big data and unstructured data. But we needed different leadership to age Autonomy, and by that I mean age it kind of like wine.

And so you added Autonomy to Bill Veghte’s responsibilities.

Yes, it’s going to be Bill for now and ultimately it may end up back in the software business, but I need full-scale attention on this by someone who has a lot of experience. We’ll figure out later if its permanent or not, but right now he’s the guy.

What does success look like at Autonomy?

I think it needs to grow rapidly. I think this is a very rapidly growing market. We need to continue to lead it. The good news is that I don’t see a competitve disruptor in the marketplace. So I think we have a good opportunity. But I also want to make sure that it gets integrated into the rest of HP in a good way. So we’ve started adding Autonomy into document workflow in our printers. And I want to think through all the different ways that Autonomy can be useful to the rest of HP, and we’re just starting to think about that.

The problem I think you said was that there was some difficulty closing deals at Autonomy that HP had teed up?

It’s classic. HP fed Autonomy a huge number of deals. But Autonomy didn’t have a system for accepting those deals, and closing them. And understand, when you’re working with big companies, there’s processes. When you sell with Enterprise services, there are steps you need to go through. When you sell with Dave Donatelli, there are some steps you need to go through. So that was the biggest challenge.

Asa Mathat / AllThingsD.com

That was nice of Larry. There’s no question that the BCS business has been hurt by this. You can see it in the results. It was growing by 10 percent before Oracle refused to port and now its declining by between 20 and 30 percent a year. This has been very tough for HP and very tough for Dave Donatelli’s business. In the end, if we win the lawsuit we will continue to protect our customers interests. The reason we went to the mat with Oracle on this was because we have a lot of customers on Oracle Itanium who do not want to switch, do not want to get off of HP Unix and on to something else. And they kinda like what they have and they’d like to stick with it. I think either way, Dave’s got in the works the next generation of Business Critical Servers on a more open platform. It’s called Odyssey, which is pretty cool. Ultimately we’ve got to build Unix on a Xeon chip, and so we will do that. I don’t have a lot of animus toward Oracle, and historically ours has been one of the great partnerships in IT history. I have a lot of respect for Oracle and when we’re through this court trial I would like to see us work together again.

Has anyone sought to call Ellison or Safra Catz and try to sort it out?

There has been a lot of back and forth, some of it before I came on board. It’s a very rapidly changing industry. I’d like to believe that once we get this behind us we can work together again.

You don’t think the damage to BCS is permanent?

It’s not been a good thing for the business. Let’s be very clear about that. This has not been good for HP. In the end it’s all about our customers, and it’s not been good for them.

Let’s talk again about SKU reduction, which is a favorite subject of mine. How might it become apparent to customers? What does it mean to you?

Reducing complexity, improving quality, reducing inventory, and better meeting customer needs. Somehow this company got into the habit of adding more and more options for more and more people, which on the surface is good, but when you examine the law of unintended consequences it’s not good for the company and it’s not good for the customers. The more platforms you develop to, the more SKUs you have, the more complicated it is, and there’s a higher chance of quality problems slipping in. And so everyone in the company is in agreement with this part of the strategy. I think you will see a smaller number of products tailored to specific market segments where we can get real supply chain leverage, real inventory leverage and real parts leverage. You forget about all the spare parts we have to carry on the inventory. I think this is a big part about how we deliver better quality at lower cost and deliver real benefits to customers.

You’ve been on the job eight months. No one really brings up the question of succession, you have deep management bench, but — knock on wood — if you get hit by a bus tomorrow, who’s in charge?

The board takes this sort of thing very seriously. We have a succession plan in place for all my senior execs, including me. I’m not going to give you any details about it, but that was a good try.

Mitt Romney has said that he thinks you should have been elected Governor of California, and so the fact that he’s talking about you makes me wonder, if he wins in November, if you might find yourself offered a job in a Romney White House.

He might call me, but categorically I would not accept. This is a decision I had to make before accepting the job to run HP. You can’t land at a company like HP, that has gone through what it has gone through, and think that you’re only going to stay 18 months.

Even if he offered you a spot on the as his vice-presidential running mate? Not that anyone is talking about that.

Categorically no. HP needs consistent leadership more than anything else. And my view I will stay as long as the board would like me to stay. It would be completely the wrong thing to do to leave HP right now. And by the way? I love it.

Despite being one of the biggest overall technology companies by revenue and also the world’s biggest supplier of personal computers, one way or the other, HP’s brand image is inextricably tied to printing. And printing — of photos and of text — is something the conventional wisdom says that people and companies are doing less often. Indeed, sales in HP’s Imaging and Printing Group — recently combined with the personal systems group into a new Printing and Personal Systems Group — fell by 7 percent to just south of $6.3 billion in HP’s most recent quarter.

That combined operation is headed by Todd Bradley, who has been running HP’s personal computing business since 2005. In an interview with AllThingsD today at an HP event in Las Vegas, Bradley talked about a lot of things, but I was more curious about his observations on the printing business basically because it’s the newest thing in his managerial portfolio.

Logically, PCs and printers fit together and should be sold together, whether to consumers or to businesses, and yet for years HP has treated them as different lines of business. Now that they’re combined, Bradley says he expects to see some new operational efficiencies, both in how HP printers are marketed around the world and in how they’re manufactured.

First and foremost, Bradley says, the conventional wisdom on printing is wrong. “If you look at any data, printed pages continue to go up by about 2 percent a year, so people are still printing. And as a business requirement it continues to grow. It’s incumbent on us to make HP printers more relevant, and that’s why you’re going to see us taking such an aggressive market position and media position.” Watch for some heavy marketing from HP when it launches a new round of seven multifunction printers in the fall, he said.

Another thing that may change is the accepted old model of selling printers at a loss in hopes of making profits back on ink and toner and paper. Long the secret of HP’s success in the printer business, this fundamental approach may be changing, though Bradley wouldn’t say exactly how. “There are parts of our product line where’s that’s true and we’re evaluating them very, very closely,” Bradley said. “There are some low-end printers that we do lose money on and then the question is do we sell enough ink, does the model hold up? We’re doing a lot of work on that right now. Stay tuned for some things we’re going to do globally about ink.”

The new PPSG will also benefit financially, Bradley says, from the consolidation. There are some cost savings to be found in combining certain operational aspects of the businesses, like their supply chains and logistics. “That and the consolidation of our two go-to-market channels for printers and PCs. There’s some big dollars and big opportunities for savings there,” Bradley says.

Here I brought up one my own odd little obsessions: SKU reduction. In February, HP CEO Meg Whitman mentioned SKU reduction on an earnings conference call, which prompted me to write about how reducing the number and variations of products can help a company by simplifying its approach to the marketplace, and how the most visible example of that in recent memory was Apple in the 1990s.

I asked Bradley if it stands to reason that HP might benefit from trimming back on the number of SKUs it produces in its PC business, but also in printing, and he agreed. “I think you have to dial back to the work we did in the Personal Systems Group in June where we moved away from the historic consumer commercial model and switched instead to a model that focuses on value and volume. It allows us to better compete,” he says.

In the PC business, HP spent some time researching which models were best targeted at various groups of consumers. Bradley says a similar process will happen in printing. “Now we have consumer segments lined up against products and we’re using insights from that to drive the simplification. And we’ll do something similar with the printer business,” both with printers and with ink and toner, Bradley says. “There’s a lot of overlap there.”

The consensus among Wall Street analysts calls for HP to report sales of $29.92 billion and a per-share profit of 91 cents. And, for the most part, analysts are expecting HP’s results to be in line with expectations, if maybe a little light on sales.

One possible curveball, however, is Europe. Given HP’s exposure to the faltering markets on that continent, about which Dell complained in its earnings report yesterday, HP could conceivably see its results hurt more by Europe than by Dell.

Europe accounts for 37 percent of HP’s revenue, making it the most heavily exposed there among the large IT vendors. “The increasing uncertainty and resulting macro weakness in Europe will likely act as an ongoing headwind to growth,” wrote analyst Chris Whitmore of Deutsche Bank Securities in a note to clients Tuesday.

But the big item on the agenda will be HP’s plans for restructuring, and how many jobs may be lost. As AllThingsD reported last week, HP is contemplating a restructuring that could see as many as 30,000 jobs eliminated, including 5,000 through voluntary retirements. What’s unclear is over what length of time these jobs will go — I’ve been told by sources that this is a key detail, and it is likely to be a fairly long period of time.

The reductions would be the latest in a long, painful sequence of cuts for HP that began years ago. Whitmore notes that HP chopped 50,000 jobs over the course of five years under the tenure of former CEO Mark Hurd. “We suspect HP will position this cost cutting as ‘cut to reinvest’ — an interesting strategy considering HP has been restructuring for the past decade,” Whitmore writes.

Whatever restructuring Whitman puts on the table, Whitmore expects it will help HP maintain its prior guidance — it expects to finish the year with a per-share profit north of $4.00 — but it’s still not going to be easy. Summer PC demand is expected to be soft, and the lack of a tablet strategy isn’t helping. Demand for corporate PCs will likely be a rare bright spot, but just barely.

In printers, the relatively weak results of printer concerns Canon and Lexmark don’t exactly imbue the market with confidence that the trend of sliding profits and sales in HP’s printer operation, recently combined with the Personal Systems Group in a sweeping reorganization announced last month, is anywhere close to being reversed.

One thing to watch for — and something about which Whitman has hinted in the past — is SKU reduction. An SKU is industry lingo for “stock-keeping unit,” and it refers to specific models and makes and packages of a given product. Consumer printers — and, in fact, printers in general — would be an obvious place to cut back on the number of models offered to the market, and it would be perfectly in line with Whitman’s prior messages emphasizing simplicity and streamlining HP’s approach to the market. While I don’t expect Whitman to go on at length about this subject, it’s the sort of thing she may touch on as she hones the “simplicity” message.

What not to expect: One big bomb dropped all at once, outlining the sum total of Whitman’s long-term strategy for HP — one she has already admitted will take a long time to implement. The fact is, it’s a big job, probably one of the biggest in all of the corporate world, and so it’s necessarily coming out in pieces. Today’s piece will be a big one.

HP shares surged by more than 7 percent, or $1.69, today to $25.10, mainly on a positive report on the state of its personal computer business from the market research firms Gartner and IDC.

As I noted yesterday, HP saw its share of the global market grow fractionally, according to the reckoning of Gartner, at the expense of Dell, Acer and Asus, while China-based rival Lenovo grew even more. IDC saw similar results, and both research houses were surprised to see the overall market grow in the first quarter of the year where a market decline had been expected.

That was enough to give HP shares a long-awaited jolt. So far in 2012, HP shares have fallen a little less than 3 percent, but that comes on top of the ridiculous 40 percent drop they suffered during 2011.

Much of that decline was suffered on Aug. 19, 2011, a day after the company, under then-CEO Léo Apotheker, missed its quarterly forecasts, spent $12 billion to acquire the British software firm Autonomy and floated an ill-advised plan to spin off the very PC operations that gave investors a rare moment to cheer. Looking back now, it does make for some irony, no?

To be sure, HP’s share price has had a better than average week. On days when the Dow was mostly in the red, HP has been one of the few stocks on the board showing green all week.

And frankly an uptick in the PC business, while welcome indeed, isn’t exactly going to fix HP in any fundamental way. At least not yet. PC sales were 31 percent of overall sales in 2011, and declined slightly over the prior year. And while that made HP’s Personal Systems Group the biggest business unit at HP last year — and now combined with printers it’s even bigger — profits both in PCs and in printers are seriously under attack.

The hope lies in the enterprise and in services, and maybe in the cloud. Profit margins in the enterprise business and in the services group were roughly twice what they were in PCs. HP also made a big announcement on the cloud computing front earlier this week that would seem to put it on course to compete with the likes of Amazon in providing computing capacity in a similar for-hire fashion as the Web retailer does with its Web Services unit.

It’s hard to know how profitable that business is for Amazon because it doesn’t disclose its operational size and profit margins and lumps that operation into its $1.4 billion category labeled “other.” However it’s worth noting — as HP surely has — that Amazon’s “other” category grew by 73 percent in 2011 and nearly tripled in size from 2009. There may be a real light at the end of that tunnel yet, but there’s lot’s of work to do.

Lawyers for both HP and Oracle filed arguments seeking summary judgement in their fight over whether or not Oracle has the right to stop making software that has been ported to run on computers using Intel’s obscure Itanium chip. Oracle said last March that it would no longer support the chip, which is, for all intents and purposes, only used in certain exotic high-end systems sold by HP. For its part, HP has argued that Oracle is bound by a contract to continue to support the chip for several more years. I’ve embedded the competing filing documents below.

The legal moves naturally touched off a renewed salvo of public statements between them that added some interesting details to the proceedings, and which provide some fair insight into how the two players are going to argue at trial. Basically, it’s going to come down to whether or not the two companies have an enforceable agreement that was struck as part of a wider settlement they reached when they settled another lawsuit that followed former HP CEO Mark Hurd’s hiring by Oracle.

Meanwhile, Oracle insists that HP and Intel are lying to the marketplace about the future prospects of the Itanium chip, and has characterized their efforts to keep the chip alive in the marketplace as “a remake of ‘Weekend at Bernie’s.’”

HP scored first:

“The information brought to light during the discovery period further underscores the key facts of this case. In fact, it has led HP to seek a pretrial ruling that Oracle is contractually obligated to offer future versions of Oracle’s software on Itanium. It is time for Oracle to quit pursuing baseless accusations and honor its commitments to HP and to our shared customers.”

HP’s statement then went on to use several historic statements by Oracle, emphasizing the partnership and commitment to Itanium. It even quoted Oracle CEO Larry Ellison:

“Ellison testified that in making his decision to issue Oracle’s March 22 announcement that Itanium was “nearing the end of its life,” he relied on a conversation with Intel’s chief executive officer, Paul Otellini. But Ellison admitted under oath that Otellini did not say that Itanium was nearing the end of its life. And the Intel executive responsible for the Itanium business has now testified unequivocally that Oracle’s claim was not true.”

Oracle attorney Dan Wall issued a pair of statements, and one was more or less the standard summary of that company’s position: So important an agreement as the one that would obligate Oracle to extend a strategic partnership wouldn’t be contained in a settlement over what was essentially a dispute over a noncompete agreement.

“We don’t believe, nor do we think HP really believes, that a settlement agreement relating to Mark Hurd’s employment could possibly obligate Oracle to write new software for a platform that is clearly end of life. We are pleased the Court now has the evidence needed to see HP’s purported contract claims for what they are.”

Then, apparently after seeing HP’s extensive statement , Wall shot back with more extensive — and interesting comments. He cites testimony fromformer HP chief communications officer Bill Wohl as admitting that the lawsuit was more or less a public relations stunt that was part of a wider campaign intended to raise outrage among their shared customers and force Oracle to reconsider.

“Rather than filing a legal motion, HP has yet again filed a press release that continues its campaign of lies about the Itanium roadmap. HP’s PR Director admitted the lawsuit was conceived as part of a campaign designed to ’foment customer outrage.’  HP’s documents and executive deposition testimony make indisputable the fact that Itanium is nearing the end of life as Oracle said. Intel documents confirm that as well–which is why despite repeated efforts by HP to get Intel to refute Oracle’s March 22 press release, Intel has refused to say more than that it intends to deliver the two announced versions of Itanium.

“The status of Itanium, meaning its impending end of life, has been maintained as one of HP’s most ’closely guarded secrets’ from customers, partners and HP employees alike in order to avoid giving its sales organization ’another reason not to sell’ Itanium and to continue to ’milk’ maintenance profits from its customers. HP documents reference HP-UX on Itanium as on a ’death march’ and confess that Intel would be doing ’high fives’ to no longer have to develop the chip given its poor performance and market traction and the huge opportunity cost associated with it. HP’s documents also contemplate various options to deal with the inevitability of Itanium’s end of life, including paying Intel to ’elongate’ its life. HP’s documents make clear that HP was intent on ’creating a market perception of long term viability’ and introducing versions of the chip that are ’more of an illusion than of technical significance.’ In other words, HP’s strategy was to mislead the market and its customers as to the real status of Itanium. Oracle will not participate in this fraud.”

The history and context of this lawsuit is long and complicated, and fraught with the fact that for a time, HP was run by former SAP co-CEO Léo Apotheker at a time when Oracle and SAP were locked in their own nearly-nuclear multiyear legal battle. The fact that former Oracle president and Ellison enemy Ray Lane is HP’s executive chairman only adds to the enmity.

However, there’s evidence to show that HP is the one being hurt the most by the ongoing fight. Without the support and maintenance fees that HP collects from companies who buy its Itanium-based servers, the company is, in the words of one of its own executives, “strategically screwed.” Amid the doubts brought on by the fight with Oracle, sales of HP’s highly profitable business-critical servers have suffered. And with the printer business suffering and PC sales flattening, that is the last thing HP needs.

Oracle, by all appearances, can afford to let its Itanium business die, and has argued that Intel would like nothing better than to get out of the business of making Itanium chips that are only profitable with subsidies from HP; and that it has quietly planned to let the chip reach the end of its life and transition customers over to its more mainstream Xeon chip, which it now says is “suitable for any workload.”

Anyway, the dueling filings are below, HP’s first:

HP Summary Motion

Oracle Summary Motion