AllThingsD » Todd Bradley

Investors Punish Hewlett-Packard Over Shake-Up

Arik Hesseldahl — Wed, 21 Mar 2012 21:50:32 +0000

Shares in Hewlett-Packard fell more than two percent in the wake of a sweeping reorganization that re-combined its market-leading printer and PC business units into a single business group.

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.

HP Confirms Printer and PC Combination, Creates New Enterprise Group

Arik Hesseldahl — Wed, 21 Mar 2012 13:41:11 +0000

Hewlett-Packard just confirmed what AllThingsD reported exclusively yesterday: Its printer and PC divisions will be combined into a single massive business unit, reporting to Executive Vice President Todd Bradley. The company also confirmed that Vyomesh Joshi, the well-known head of the printer group, will be retiring after 31 years with the company.

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.”

Exclusive: In a Major Restructuring, Hewlett-Packard to Combine Printer and PC Groups

Arik Hesseldahl — Tue, 20 Mar 2012 16:55:35 +0000

Hewlett-Packard will announce a sweeping reorganization today that will move its Imaging and Printing Group, once the jewel in the IT giant’s crown, under its PC-making Personal Systems Group, sources familiar with the matter tell AllThingsD.

Under the plan, Vyomesh “VJ” Joshi, long the executive vice president in charge of IPG, will leave the company. The combined business unit will report to Executive Vice President Todd Bradley, sources said.

Vyomesh "VJ" Joshi

HP had no comment.

A source familiar with HP’s thinking regarding the reorganization said the combination of the two groups is part of a cost-cutting and simplification measure of the type discussed by CEO Meg Whitman during HP’s last earnings conference call on Feb. 22. During that call, Whitman discussed ways of streamlining HP’s operations, both in how it interacts with customers and in how its employees do their jobs internally.

HP sees the two business groups — IPG sells printers both to consumers and businesses, and PSG sells PCs to consumers and businesses — as making more operational sense combined than apart, the source said. The plan is to have their line of business more readily integrated so they can approach customers together and with unified product offerings.

IPG was once the financial engine seen as keeping the rest of HP flush. It sells more printers than anyone else in the world, but makes most of its money selling ink cartridges and other supplies that tend to make higher profit margins than the printers themselves.

However, the IPG unit has seen its business decline in recent years. In its most recent quarter, HP reported that sales fell by 7 percent, to $6.3 billion, while the unit’s earnings from operations fell by 32 percent.

At the time, HP attributed the slide in the unit’s fortunes to its exposure to Japan, where many of its printers are built by Canon, and sold at a loss. The strong Japanese Yen created a currency headwind that hurt the business, and ongoing supply chain problems caused by last year’s earthquake and tsunami in Japan — plus the flooding in Thailand — also hurt the business, the company said. Joshi, 57, is a 31-year HP veteran, who has run the group since 2002.

PSG is the unit that had been considered for a spinoff as an independent company under HP’s previous CEO Léo Apotheker. The plan was pulled back after HP’s board of directors fired Apotheker; Whitman shelved the plan, arguing that the PC business gives HP needed size and scale in order to more effectively negotiate with component suppliers. Bradley, 53, the onetime CEO of the handset maker Palm, has run the group since 2005, and was a candidate to be CEO of the spun-out PC company, had the move occurred.

The combined business operation will give Bradley responsibility for what is easily the biggest group inside HP. Together, IPG and PSG accounted for $65 billion in sales in 2011, or more than 51 percent of HP’s overall sales. Combined profits were $6.3 billion. At that size, the combined group will be substantially larger than HP’s services group, at $35 billion in 2011 sales, and its Enterprise, Servers, Storage and Networking Group, which recorded $22 billion in sales.

HP Beats Street's Lowered Expectations

Arik Hesseldahl — Wed, 22 Feb 2012 21:18:23 +0000

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.

HP CEO Whitman Earned One Dollar Plus $16 Million in 2011

Arik Hesseldahl — Fri, 03 Feb 2012 15:27:02 +0000

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.

HP's TouchPad: The Tablet That Refused to Die

Arik Hesseldahl — Mon, 31 Oct 2011 12:45:16 +0000

Hewlett-Packard’s TouchPad is back for sale at Best Buy.

Unceremoniously killed under HP’s prior CEO on Aug. 18 after disappointing sales, the device quickly found a market after retailers and HP itself slashed the prices on remaining stock.

This time, according to a Best Buy press release, a 32 gigabyte TouchPad is going for $149, with the purchase of an HP- or Compaq-branded notebook or desktop PC. Sold separately, the price jumps to $599.99.

HP, for its part, has sold out of its internal stock of the device, according to a statement on the company’s Web site. TouchPads can, however, still be found on Amazon and on eBay.

By bundling the TouchPad with PCs at its biggest retail partner, HP is giving itself an arguable edge against Acer, Dell and Toshiba in what is sure to be a cutthroat holiday season for PC and tablet sales. After about a month on the market, and before the product wound up on the chopping block, Best Buy sold less than 10 percent of the 270,000 TouchPads it had in inventory.

It’s hard to know how long the deal can last. Sources familiar with HP’s build plans say the initial TouchPad order was for between 1.8 million and two million units, though a third source disputed that number without elaborating. Regardless of the number ordered, sources familiar with the deal say that HP’s decision to kill the product had no immediate effect on the build plans, as components had already been purchased and manufacturing was under way. A source familiar with the matter says the manufacturer is Taiwan-based Inventec, not Compal, as has been previously reported. HP was contractually obligated to take delivery on the remaining units in the pipeline.

That means the TouchPad is now officially a loss leader. As an IHS iSuppli teardown analysis in August showed, HP’s cost to build a 32GB TouchPad is $328.65. At $149.99, HP takes a paper loss of more than $178 per unit.

HP isn’t exactly crying over the lost money. Remember that as part of the hot mess of news it announced on Aug. 18, the company included plans for a $1 billion charge to account for costs related to shutting down the TouchPad and webOS hardware business.

Whatever happens, this is probably the last hurrah for the TouchPad — for real this time. That is, unless no one takes advantage of the offer to buy one along with a PC. Any stock left over after the holiday season rush will probably wind up in Best Buy’s equivalent of the bargain bin.

Hewlett-Packard: One Messy Piece of Business Cleared Up, Many to Go

Arik Hesseldahl — Sat, 29 Oct 2011 20:16:49 +0000

“Glad that long national nightmare is over.”

That was the comment — paraphrased from Gerald Ford’s inaugural address upon the close of the Nixon presidency — that I received in an email from an industry source on Friday. The quote was sent in reference to the now-concluded business surrounding Hewlett-Packard’s exploration of “strategic options” concerning its Personal Systems Group.

Now that HP CEO Meg Whitman has concluded that the company is stronger with PCs than without them, there remains a fair bit of unfinished business from the dog’s breakfast of changes announced on Aug. 18.

First and foremost are the questions about the future — or lack thereof — of HP’s webOS business.

The only thing we know for certain is that HP is out of the business of hardware that runs the operating system it picked up in last year’s $1.2 billion acquisition of Palm. HP killed that business after sales of its TouchPad tablet device proved initially disappointing, only to see reduced prices spark a surge in interest from buyers.

During a conference call with analysts earlier this week, Whitman conceded that HP “needs to be in the tablet business” — and that it intends to participate in that business using Microsoft’s tablet-friendly Windows 8 operating system. She also said a long-term decision regarding the webOS software business is forthcoming within the “next couple of months.” HP has already carried out a round of layoffs in that division.

Another not very encouraging sign amid the ongoing uncertainty is the departure of Richard Kerris — who had headed up HP’s webOS developer outreach efforts — for a similar Windows-related job at Nokia.

And related to that is the fate of Jon Rubinstein, the former CEO of Palm and former head of Apple’s iPod business unit. Once the public face of webOS — and of Palm before that, as its final CEO — he has not been visible at all during any of HP’s recent upheavals.

That said, rumors have been almost nonexistent about Rubinstein seeking or being recruited for a job elsewhere. It’s not like he needs the work, but his apparent future is about as cloudy as that of the webOS itself. Currently he’s a product guy without a product; his role at HP is unclear. In July, he was bumped from his title as general manager of the webOS unit and moved into an iffy “product innovation role” within PSG.

One thing is true: Rubinstein has a close relationship with Todd Bradley, who leads the PSG unit.

At least Bradley’s fate is cleared up: The high-profile exec has been the subject of numerous reports and rumors, including a March report in The Wall Street Journal that said he had been recruited by chipmaker Intel. Since then, Bradley has been regularly asked about his future plans.

It was an open secret in Silicon Valley that Bradley feuded with HP’s prior CEO, Léo Apotheker, and was not consulted about the PSG spinoff plan before it was floated to the public.

Still, he stood the best chance of being named the CEO of whatever new company emerged from the plan. Yet Bradley’s voice was heard solidly behind Whitman’s yesterday, both on the conference call and in an interview with AllThingsD.

Bradley made it clear he intends to stay with HP for the forseeable future. His tone, both in public comments and in that joint interview with Whitman, seemed sincere — meaning he has likely arrived at some understanding with Whitman that will keep him at HP.

And Whitman can’t afford to lose a key member of an important business unit just now. (Although, as he has been passed over three times for HP’s top job in recent years, any lingering hopes that Bradley may have harbored of ever being CEO are probably now dashed.)

Outside of the consumer and PC space is the matter of Autonomy, the British software firm for which HP paid $11.7 billion, in a deal also announced on Aug. 18. There’s no question that the purchase price was high, representing a 64 percent premium above Autonomy’s share price, for starters. Many investors have frowned upon the deal, and some have even gone so far as to sue HP over how it was handled, mainly because HP shares cratered after it was announced. What is still to be fully explained is how HP extracts enough value from Autonomy — and if enough value can be extracted to justify the price paid.

Finally, there’s the matter of HP’s results in the coming quarter. With the company in a quiet period ahead of its Nov. 21 earnings announcement, there are few hints as to whether or not HP will meet its already reduced expectations for the quarter. Whitman insisted that no major announcements are expected before then, suggesting that there won’t be any negative pre-announcements.

But much will depend on the tone of the forward guidance HP gives as it looks to 2012. With its shares down nearly 33 percent so far this year — they closed Friday at $27.94, up 85 cents, or more than 3 percent, following Thursday’s decision — it can’t afford to miss another quarter. Once a tech company known for the stability it has given investors, HP has had nothing but unpleasant surprises for the last 14 months.

Now that one piece of the evolving story of the new HP is settled, many more are still in motion.

I talked about this and many of HP’s issues on The Wall Street Journal’s online “Markets Hub” show on Friday, and have embedded it here:

[ See post to watch video ]

Interview: HP CEO Meg Whitman on Keeping the PC Business

Arik Hesseldahl — Fri, 28 Oct 2011 00:08:41 +0000

I just got off the phone with Hewlett-Packard CEO Meg Whitman and HP’s executive vice president Todd Bradley: We talked about HP’s decision to keep its PC-making Personal Systems Group, which Bradley runs, inside HP, rather than spin it off into a separate company.

The decision amounts to the first — and it may turn out to be the only — repudiation so far of the strategic steps taken by HP’s prior CEO, Léo Apotheker. HP rolled out the decision to “study strategic alternatives” for the PC unit in a messy, multipronged announcement on Aug. 18.

The spinoff scenario made little sense in light of two key factors: HP is the biggest PC maker in the world, and while its profit margins are slim, its market lead over rivals Dell and Acer continues to widen. Second, by staying in the PC business, HP continues as the world’s largest consumer of chips and hard drives and other key components that are used across its other lines of products, like enterprise servers and even printers. Cutting off its PC business would have weakened HP from a negotiating standpoint with suppliers like Intel, Seagate and others, and would thus cut into HP’s more profitable lines of business. So when Whitman says of the PC business that “together we are stronger,” she’s not kidding. It’s a fundamental truth of HP’s business.

That Aug. 18 announcement also included the end of HP’s webOS hardware business; the $11.7 billion acquisition of the British software firm Autonomy; and, last but not least, a reduction in its revenue outlook for the fiscal year. Apotheker lost his job 35 days later.

During a 30-minute conference call with analysts today, Whitman said to expect to hear her speak more about cloud computing in the near future. HP’s cloud-based initiative was announced by Apotheker in March, at a major HP event in San Francisco.

Also during today’s call, Whitman said that she wants to make sure that HP isn’t spreading itself too thin. “I’m a big believer in doing a small set of things really, really well,” she said.

Still outstanding, and apparently undecided, is the fate of the webOS business. HP killed the hardware aspect of that business following ridiculously poor sales of its TouchPad tablet. Since then, the message has been on again, off again as HP has variously cut the prices on its existing inventory of TouchPads, then committed to making a few more, as consumers swooped in to buy them at a discount. There were no decisions about that today.

But given that Whitman, as an HP director, first signed off on the plan to explore the spinoff of the PC business, and has now decided against it as HP’s CEO, my first question for her was essentially this: What changed?

AllThingsD: So, Meg and Todd, let’s start at the top. Meg, in August, when you were a member of HP’s board of directors, you signed off on the decision to explore a spinoff, and now you’re going in the other direction. What changed your mind?

Whitman: As a board member, I supported the idea of exploring strategic options. This was an idea that had been floated for quite some time. We didn’t wake up this summer and decide to do it, so it wasn’t a new idea. We were looking at this from a real position of strength. This is a fabulous business. It’s No. 1 in its business, and profitable, which is quite different from the IBM-Lenovo decision a few years ago. So I was supportive. As a board member, I thought that if it’s better for customers and better for shareholders, we should look at it. I mean, that’s your fiduciary obligation as a board member. And then when I came on as CEO, I asked for a really data-driven analysis, line by line, cost center by cost center, of what the real cost synergies would be, or what the increased costs would be, and what the revenue losses or synergies might be. We had 18 different work streams with more than 100 people involved in this, and it was a real tour de force, because it’s something that HP does really well. And the math was very compelling on this. The costs to separate were far greater than the costs to remain together. That was the first thing we did. The second thing was that we talked to customers and channel partners, and the feedback was, by and large, that “you are stronger together.” They appreciate the full line of products. They appreciate the supply-chain synergies and cost reductions you get by being one company. So after we went through the analysis, it was compelling.

I keep coming back to the idea that you buy more parts than anyone else, and so being the biggest PC maker would necessarily weaken your ability to negotiate with suppliers like, say, Intel. You get a better price on chips for servers by also being the biggest maker of PCs, for which Intel also supplies a lot of chips. Is it really that simple, or is it more complicated?

Whitman: That’s one element of it. We are the largest buyer of components, we have the best supply chain. And we’re stronger and bigger in server storage and networking because we have PCs.

Bradley: Over the past six years, myself, VJ Joshi [HP's head of printing and imaging] and Dave Donatelli worked very closely to see where we can consolidate and coordinate our supply-chain efforts, whether that’s buying things from Intel or logistics providers or manufacturing facilities. So there’s a breadth of integration that takes place. We all want to get what leverage we can out of commonality, without destroying the ability to innovate within each one of our very different businesses. To give credit where it’s due, a lot of Mark Hurd’s leadership was around getting a lot of efficiency out of our supply chain …

Whitman: Absolutely.

Bradley: … and it clearly has been a big driver to the profitability in PSG.

Whitman: The other thing that Mark did was, he centralized IT and human resources and real estate and finance, and he saved a lot of money. And he leveraged that infrastructure for the benefit of all these operating divisions. And when you think about spinning off a division after the successful integration of all these costs, its really hard, because you have to create a whole new subset of IT, or a whole new finance system, and that’s not inexpensive.

The fact then remains that PCs are a difficult business. The profit margins are thin, the competitive environment is tough — though you’re certainly on top of it now. There are challenges and difficulties — and Meg, you even conceded on the conference call that keeping PCs will weigh a bit on the overall profit margin. But I guess what I’m asking is: What’s going right about PCs, and what’s going wrong about it that you intend to fix?

Bradley: First off, I think we all at HP — not just in the PC — we focus on continual improvement. Our service to customers will never be good enough, the quality of our products will never be superior enough. It’s a quest for us, every day, to continually improve. From a margin perspective, we make a host of products, from calculators to Superdome computers. And the blending of those margins is something that Meg and Cathie [CFO Cathie Lesjak] take into account as they provide guidance both externally and internally. Our role in our big businesses is to optimize performance from a growth and profit perspective, and I think we do that pretty well. Everyone always says the PC business is really hard. I’m anxious to find a business that’s easy, because I’m ready to sign up. (Laughs.)

Well, since you bring it up, there’s been an awful lot of speculation as to your career plans, Todd. Can you say what they are now?

Bradley: I’m still planning to continue to drive PSG the way we have. We have a great team of people, and I think Meg — and I’ll say this as politely as I can — Meg has filled the leadership void that I think the company needed pretty broadly.

So we’re done speculating what your next step may be?

Whitman: We are.

Bradley: I am. I have no plans, other than to focus on how we drive PSG and HP. There are great people here to work with. It’s fair to say we learned things. This process has shown us some areas that we’re going to improve on pretty quickly. Clearly, we have some challenges, but I think I’m working with the best team of executives in the industry.

Whitman: I’d add one thing — that while the operating margin of this business is not as high as some of the other businesses at HP, the return on investment capital is really terrific. And that’s because of the business model that Todd has set up. And when you run a big company like HP, you have to look at the return on invested capital almost as much as you do your operating margin. So that is another thing to consider. We’re going to continue to be the best at managing our supply chain and manufacturing excellence. We’re going to play to win in China and Brazil and other top emerging markets. We’re going to refine the product strategy and continue to make great, trendsetting products. I’m excited about this business. I actually really like it.

Meg, we’re talking two days after Virginia Rometty was named CEO of IBM. And obviously there’s some significance that the two biggest technology companies are now run by women. Any thoughts on that? Do you know her?

Whitman: How great is that? It’s fabulous. It may be a milestone, and I’m proud to be part of it, and I’m sure Ginni is, too. I’ve only met her once.

Five Questions for HP's New CEO Meg Whitman and Chairman Ray Lane

Arik Hesseldahl — Fri, 23 Sep 2011 13:30:21 +0000

It’s been an extraordinary week for Hewlett-Packard. On Monday, HP was a sleeping giant with an unclear strategy, an unpopular CEO and a stagnating share price.

Then word came, via AllThingsD, that something big was coming from the board of directors. And as AllThingsD first reported (again), HP directors made one of their own, Meg Whitman, the former eBay CEO who had become a director earlier this year, the new CEO. Léo Apotheker resigned, but don’t cry for him, because according to his contract, he made out rather well. Even before it was made official, investors applauded the move, sending HP shares skyward.

Analysts did what they always do, and, well, analyzed. And though it looked more like drama criticism, it’s not as if HP hasn’t known boardroom dramas before. Finally, the deed was done, meaning it was time to hold a conference call, but not before talking first to Kara Swisher of AllThingsD.

I got to talk to Whitman and HP Chairman Ray Lane yesterday, too, but I had to wait until after the conference call. With so many critics screaming that Whitman has no experience running an enterprise hardware company — and let’s be honest, there aren’t that many who do — I asked her to elaborate on the defense, made on the conference call with analysts, that her experience as a buyer of enterprise technology, during her years as CEO at eBay, provided important experience that will help her be an effective CEO at HP. I also asked about Autonomy, the British software firm that HP is in the process of acquiring for $10 billion, and how it will fit within HP; about the company’s plans for cloud services; and about the state of the HP brand amid all the corporate mishegas that has unfolded in the last several months.

AllThingsD: Meg, the main criticism of you, since you’ve been named CEO of HP, is that your primary experience before was at eBay, which is a consumer-facing company. The response on yesterday’s conference call has been that at eBay you were a purchaser of a lot of enterprise technology and that this gives you some important relevant experience. I get the point, but could you elaborate on it a bit? How does having been an enterprise buyer help you be HP’s CEO?

Whitman: What HP needs now more than anything else is management skills, communication skills and a commitment to executional excellence, all of which I know well, and are sort of core competencies from my 35-year career in business. I know technology because I ran a company whose very existence would not have been possible without it, and was a very significant buyer of technology products. And so that brings me a unique buyer’s perspective. But I have not spent 35 years in the enterprise business. Add so what that means is that I will be relying heavily on Dave Donatelli; on Todd Bradley; on the senior executives at HP; and also, frankly, on Ray Lane, who was at Oracle for many years, and EDS, and who knows this space well. So I think what customers will get is that one plus one equals three.

Lane: I agree with that. What we need here, and what we didn’t have before, is operational execution, communication skills, getting the team on the same page and leading them. The CEOs of $130 billion companies are not leading the technology development of those companies. I think Meg can go into any enterprise and visit with any CIO or CEO and do really well. So whether it is the technology side or the sales side, I don’t think anyone is giving her enough credit on those fronts. She can do just fine. And then on top of that she has strong operating executives under her who do know the enterprise business. But right now it is the need for leadership of the people, a focus on executing and operating. I could point back to Lou Gerstner at IBM, or even my own days at Oracle. When I joined Oracle, people thought the board had lost its mind, because I was a consultant at Booz Allen. People scoffed and said ‘How is a consultant going to lead the worldwide sales force at Oracle, a trained wolf pack?’ And somehow I figured it out. And I knew nothing about software, but I learned, and I learned from Larry Ellison, who is one of the best.

I want to talk a bit about Autonomy, and about unstructured data. You made a comment about that when you talked with Kara Swisher of AllThingsD yesterday. Talk to me about where you see Autonomy fitting within HP. Do you still intend to let it be independent? How do you see the alignment shaping up?

Whitman: It’s a big and fast-growing market. Of all the data out there, about 15 percent of it is structured and 85 percent of it is unstructured. And the unstructured data is growing by leaps and bounds. There are not a lot of good software companies that can help companies manage unstructured data and help companies make business decisions based on what they see in that unstructured data. So what we hope to do with Autonomy, and I’m enthusiastic about this acquisition, is take what is fabulous about Autonomy — they have a leading position in the marketplace — and put it through the very powerful HP distribution system. And I think what Mike Lynch is excited about — he is the founder and CEO of Autonomy — is taking this great product and getting it into more people’s hands. And we just need to grow this company as fast as we can; extend our lead and our accumulated experience in this area. So that’s the plan for Autonomy.

Lane: Yeah, I think the synergies are great, and I think it makes a lot of sense. It will make a lot of sense to customers if HP engages them in a dialogue of managing unstructured data.

You don’t think HP paid too much for Autonomy?

Whitman: You know what? It is what it is.

Lane: We wish we could have bought it for cheaper, but it was the market price. People thought we overpaid for 3Par, and you know what? We’re hitting it out of the park.

Is HP still going to be player in cloud services? That was a big commitment that Léo made in March. How far along is that plan?

Lane: Absolutely. The cloud is way ahead of plan. So our cloud services have gone live. So that is absolutely part of the plan, yes.

Meg, a lot of the same people who applauded your selection to HP’s board of directors are criticizing your selection as CEO. Why do you think there’s a disconnect?

Whitman: I don’t know. There’s always people who have different points of view on things. What I have to do — and I said this on the conference call — is lead this company, make it a great company again and fulfill its destiny as the icon of Silicon Valley and of California, and deliver the results. I will have to prove myself by delivering the results. If we’re going to restore the confidence that investors have in us, and that employees have in us, we have to deliver. We have to mean what we say and say what we mean and deliver the results. And that is what I intend to deliver.

Meg, you have a lot of history managing brands. I’m thinking of the job you had managing brands for Procter & Gamble. What’s wrong and what’s right about HP’s brand right now?

Whitman: I think HP is known as the world’s largest provider of information technology, and we are a trusted brand. We are a worldwide brand that touches both consumers and businesses. If you’re an enterprise, we have full suite of solutions. I know that when I bought enterprise hardware and software at eBay, I wanted one person to choke when something went wrong. I wanted one supplier to go to and say ‘Hey, this is not working.’ And so I think we have a fabulous brand in a world where technology is increasingly fundamental. I will say — and Ray would say this as well — I think we need crisper communications with all the constituencies. I think on Aug. 18 we confused people. We didn’t mean to do that, but we did. And so I think we’ve got some work to do around communicating crisply and cleanly about what we’re about — the moves that we’re making — to employees, customers, shareholders and, frankly, to the press.

Executive Moves Continue at HP as Investor Relations VP Leaves

Arik Hesseldahl — Fri, 09 Sep 2011 22:15:07 +0000

There’s news of yet another executive shift at Hewlett-Packard. The company just confirmed that Steve Fieler, vice president of investor relations, will be leaving after the company reports fourth-quarter earnings, which will be on Nov. 21.

We heard the tip from a source familiar with the situation, and an HP spokeswoman just confirmed it: “HP’s current vice president of investor relations, Steve Fieler, has decided to leave HP to pursue other opportunities. Steve will stay on with HP through the Q4 earnings cycle to facilitate an orderly transition.”

We haven’t yet heard where he’s going, nor anything about a replacement being named.

According to his LinkedIn profile, Fieler was named VP for investor relations by CFO Cathie Lesjak in July of 2010. He first joined HP in 2004 as senior director for strategy & corporate development after stints at AirPrism and General Electric, among others.

The move is the latest in a string of executive shifts at HP during the last several months. In June, chief administrative officer Peter Bocian left for a job with J.P. Morgan.

Then in July, Stephen DiFranco was named senior vice president and general manager for the Americas region in the Personal Systems Group (the unit now expected to be spun off in the coming months), reporting to Todd Bradley.

On Aug. 18, HP announced a torrent of news, including plans to spin off its personal computer unit, shut down the webOS hardware business and spend $10 billion to acquire the British software firm Autonomy in a move to shift its emphasis away from consumer-oriented businesses in favor of more enterprise-centric businesses. HP shares still haven’t recovered from that combination and have fallen about 24 percent since that day.

As HP announced the news on a conference call with analysts that day, it fell to Fieler to begin the proceedings with the opening statement confirming all that had been reported earlier in the day.

Soon after that, Bill Wohl, chief communications officer, was put on what’s been described as a “special assignment,” and HP’s corporate communications department was placed under the authority of chief marketing officer Marty Homlish.

HP shares fell along with the rest of the market today, down $1.21, or more than 5 percent, to $22.66.

My Picks for Yahoo's Next CEO -- Maybe Snoop Dogg, Ya Digg?

Kara Swisher — Wed, 07 Sep 2011 14:00:32 +0000

The firing of Yahoo CEO Carol Bartz leaves open one of the bigger and more difficult jobs in tech — one that has taken its toll on many.

Nonetheless, rapper Snoop Dogg stepped right up to the Twitter plate yesterday, as soon as news broke of the ouster.

Tweeted Snoop Dogg:

“Im takn over as tha CEO of Yahoo. Need sum of tha Snoop Dogg content ya digg. Nuff Said.”

Not nearly nuff!

Thus, while the Yahoo board has yet to begin a search, I have already been hard at work on selecting the next CEO.

(Last time, the company took none of my suggestions, but after the most recent result, the directors might want to pay mind!)

Sources said Yahoo is looking for an experienced Internet type, either from inside or outside the company.

“Yahoo has put its flag in the ground as a digital media company with a technology base,” said one source. “The job requires big buckets of expertise and needs someone who will grow the company.”

Here I go with the outsiders:

Peter Chernin: The former News Corp. exec has been eyeing Yahoo for a possible takeover with other investors. Both Yahoo and I had picked him when co-founder Jerry Yang stepped down as CEO almost three years ago, and he had declined the offer. This time, perhaps a big chunk of the company and total autonomy would work, even if making a hit like “Rise of the Planet of the Apes” is more fun.

Sheryl Sandberg: The COO of Facebook is sort of the anti-Bartz, with a smooth and efficient persona, and she is an experienced tech exec. But the former Google exec is at a place of growth at the social networking site, and is unlikely to want to leave the big show, especially since a blockbuster IPO is looming.

Jason Kilar: The Hulu CEO is in the midst of the process of selling the premium video service, with Yahoo as a bidder. While he has some tense relations with the studios, Kilar is top notch in his dedication to consumer products, and has a lot of experience from his stint at Amazon, too.

Dan Rosensweig: Currently CEO of IPO-headed Chegg textbook rental service, the former Yahoo exec never got a chance to run the company as its top leader. Well-connected and still well-liked by the troops at Yahoo, it still would be pretty hard for him to go home again.

Dave Goldberg: Sure, he’s married to Sandberg (see above), but the savvy CEO of polling phenom SurveyMonkey is one of the sharpest thinkers in Silicon Valley. He sold his music company to Yahoo many years ago and has a strong background in consumer online services.

Jon Miller: The chief digital exec at News Corp. almost got the CEO spot years ago when Carl Icahn was agitating for change at Yahoo, before Time Warner blocked him via a noncompete. With the mishegas at the media giant, and dwindling digital businesses there, it might be a good escape hatch for Miller.

Susan Wojcicki: The accomplished Google exec, who runs all its ad products, has the kind of calm, cool, collected persona that Yahoo could use right about now. The search giant was founded in her garage, and she has been a key part of its success since then. Wojcicki is also an understated class act in hey-look-at-me Silicon Valley.

Todd Bradley: The Hewlett-Packard exec just got blindsided when the company kicked webOS to the curb. While he is in line to run a possible spinoff of the device business, Bradley might also want to jump out of the frying pan into the fire.

Mike McCue: The CEO of Flipboard would certainly energize Yahoo with his intense focus on quality and consumer delight. The news app start-up could be a good addition to Yahoo, and McCue, the former Netscape and Microsoft exec who is well-liked in the Internet scene, would be, too.

Joanne Bradford: The former Yahoo advertising head bolted Bartz’s regime early on to run revenue for Demand Media. Well-liked in the ad business, she also knows where all the bodies are buried at Yahoo. Since ads and media are key at the company, she’d make an interesting choice.

Yusuf Mehdi: The Microsoft online exec would also be a left-field candidate to run Yahoo, given his even-keeled personality and longtime experience in the sector. And, though pricey, Mehdi’s impact on Bing search has been important. But he’s also been involved in the software giant’s lackluster ad and search partnership and still has not turned around the situation at MSN.

Kevin Johnson: The former Microsoft exec and current CEO of Juniper was once slated to be the CEO of Yahoo, had Microsoft managed to win the company in its hostile takeover attempt. In fact, Johnson was the architect of the idea of Yahoo running the media and Microsoft running the tech.

Tim Armstrong: Well, he might have been a good candidate before the downward slide of AOL and a recent series of questionable judgments. If Armstrong can’t keep a loud tech blogger in line, it’s not clear he can wrangle the Yahoo beast.

And here’s the insider scoop:

Ross Levinsohn: The former News Corp. exec is running the Americas for Yahoo, which puts him in charge of the company’s key businesses. But he’s still struggling to turn the ad business around, and how well he does that could be a major determinant of his success. But fantastic hair!

Blake Irving: The former Microsoft exec has an amiable nature and is well-liked at Yahoo, but he still needs to show that the company can ship some innovative products, and quickly. Like Livestand, the news reader, which is muchly late.

David Kenny: The Yahoo board member is now president of Akamai, which might preclude him from the job. But the well-regarded exec — he’s a snazzy dresser, too — ran one of the Internet’s top digital ad agencies and now has tech chops from the content delivery network.

Memo to Yahoo board: I have a million more ideas, from former Viacom exec Tom Freston to former Yahoo board member Eric Hippeau. Or why not bring back a passel of former Yahoos to advise, such as former CEO Terry Semel or former president Sue Decker?

Or Oprah! I hear Winfrey will be in Silicon Valley later this week, and she has a lot more free time now.

Like Snoop Dogg, she would fo shizzle be the bomb to cover.

History Repeats Itself at Hewlett-Packard webOS Unit

Arik Hesseldahl — Tue, 06 Sep 2011 14:00:42 +0000

History, it is often said, has a funny way of repeating itself. So it appears to be at Hewlett-Packard with regard to its webOS business.

HP has announced to the world that it plans to stop selling its TouchPad tablets and other hardware running the webOS software it got after spending $1.2 billion to acquire Palm last year. Yet it wants to keep the webOS software, guessing, perhaps correctly, that there’s some revenue-generating business to be made of it yet, maybe in patents. Meanwhile, the hardware side of webOS is, after disappointing sales, being shut down, just maybe to be reanimated under the umbrella of the soon-to-be spun out PC business. And it’s building one last run of the heavily discounted TouchPad, to rid itself of parts it has already paid for. It’s complicated!

As it happens, a pair of internal HP memos — which were leaked to PreCentral.net, a site devoted to the Pre, the first smartphone to run webOS — appear to outline how the webOS split is going to go down.

According to the memos, the webOS software business — that is, the bit that HP still wants — is being moved inside HP’s Office of Strategy and Technology, or OS&T, which is headed up by Shane Robison, HP’s executive vice president and chief strategy and technology officer. One of the two memos was written by him.

And what of the webOS hardware group? It will remain within the Personal Systems Group, which is HP’s formal name for the personal computer business it says it wants to spin off as a separate company.

It’s not the first time that the hardware and software halves of what used to be Palm have been split into separate entities. Students of the history of Palm well remember the strange odyssey that began in 2002, when Palm — less than two years after spinning out of its prior parent, 3Com — split into two companies: A hardware company called PalmOne, and a software company called PalmSource.

The idea was that the two halves of the business had different agendas. The software business saw opportunities in licensing the PalmOS to numerous hardware manufacturers. In time, several companies took out licenses: Handspring, launched by Palm’s original founders Jeff Hawkins and Donna Dubinsky, was the original licensee, and others followed. Sony made a bunch of handhelds sold under the Clie brand; IBM sold something called the WorkPad; Garmin made a GPS-enabled PDA that could also help keep you from getting lost. Eventually a company called Access bought it and still operates it to this day.

Meanwhile, the hardware business soldiered on under the name PalmOne. In 2003, it acquired Handspring, bringing back its original founders, and in 2005 it bought back the rights to use the Palm name. Then, in 2007, came the big investment from Elevation Partners, the creation of webOS and, well, you know how that turned out.

HP Would Rather Spin Off PC Business Than Sell It

John Paczkowski — Tue, 30 Aug 2011 14:50:25 +0000

Of the three strategic alternatives Hewlett-Packard proposed for its Personal Systems Group earlier this month, the company favors one in particular, and it’s not a sale to Samsung or Acer. HP would rather spin off its PC division than sell it outright.

“We prefer a spinoff as a separate company and the working hypothesis is that a spinoff will be in the best interests of HP’s shareholders, customers and employees,” an HP spokeswoman told Reuters. “However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG business from HP.”

If HP does in fact spin off the PC business, the resulting company will likely be led by current PSG head Todd Bradley, who believes he’s the best guy for the job. “My intention would be to lead it through this transaction … and if it’s a standalone public company, to lead that,” he told Reuters, adding: “A standalone company could and will do what’s most required to drive value for shareholders and partners.”

Interestingly, Bradley said that tablets like HP’s ill-starred TouchPad will be among this standalone company’s product lines. “Tablet computing is a segment of the market that’s relevant, absolutely,” Bradley said. Odd to hear this, since HP canceled the TouchPad just six weeks after launching it, but evidently the category remains important to the company. Is Bradley here referring to webOS tablets, or their Windows counterparts? Hard to say, and HP declined to clarify.

HP's Todd Bradley Talks About PC Unit's Future, and His Own (Video)

Arik Hesseldahl — Wed, 24 Aug 2011 17:12:24 +0000

There are lots of competing theories about the ultimate fate of Hewlett-Packard’s $41 billion Personal Systems Group. Spinoff? Sale? Nothing at all? They’re all on the table.

The unit’s head and likely CEO in a spinoff scenario, Todd Bradley, took to Bloomberg TV’s airwaves yesterday for an extensive interview with hosts Emily Chang and Cory Johnson. The 13-minute segment is below.

Among the highlights: Johnson’s setup, wherein he quotes Hewlett-Packard co-founder David Packard as saying, “The only thing worse than a shitty business is a big shitty business,” and Bradley’s blunt refusal to answer when Chang asks if he endorsed the move to “explore strategic options” for the PC business.

Bradley also insists that the unit would sell at a higher valuation than 0.25 times sales, which would be about $10 billion. Most analysts say the unit would be valued at a fraction of the trailing year’s sales. The valuation argument may be moot now that Samsung, the most logical buyer, says it’s not interested, thus making a spinout more likely.

Later, Chang asks why HP isn’t giving the TouchPad and other webOS devices more of a chance in the marketplace. (Um, because sales were dismal?) She goes on to ask Bradley about his professional plans, about which there has been constant speculation since The Wall Street Journal reported in March that he had been recruited by Intel.

Bradley reiterates that he’s interested in running the independent PC company that might result from a spinout, and flatly denies that he’s looking for a new job somewhere else, then proceeds to paint a sunny picture about the PC unit’s prospects: “The PC market is only about 25 percent penetrated,” he says. He has a point, until you consider that many people might skip them altogether and move straight to tablets and smart phones.

With HP's Raising of the World's Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

Kara Swisher — Fri, 19 Aug 2011 16:08:13 +0000

It wasn’t until dinner this past Sunday night that CEO Léo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley’s huge unit off the cliff.

That included stopping selling hardware — smartphones and TouchPad tablets — based on the webOS it acquired from Palm last year, a $1.2 billion deal that Bradley played a big part in.

In addition, HP said it was considering spinning out its PC business and would “explore options to optimize the value of webOS software going forward.”

But, until a few days ago, several sources close to the situation said, Bradley knew nothing of these plans and neither did webOS’s key driver of late, former Palm CEO Jon Rubinstein.

This surprising lack of disclosure by HP to two of its key execs begs the question: Will they stay or will they go now?

According to sources, staying put is the plan for both for now, although it depends on what such a spinoff will look like.

It’s clear at this point that Bradley — who was once the CEO of Palm himself and was once considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year — is the leading CEO candidate of its spun-out independent PC company if that’s what HP decides to do.

But it’s not a lock, either. And, apparently, Bradley has not been locked in with regards to a spinoff either and would likely have a lot of offers from tech companies in Silicon Valley to choose from if he wanted.

“Who will they get if Bradley goes at this point, if they want to spin it off?” said one person at the company.

But, added another: “Bradley is in the catbird seat if he wants to be and it’s his to lose.”

That depends, of course, on what his is.

Questions include:

Will that new company include any of the consumer part of the printer business — a huge cash cow — if HP is indeed leaving the arena?

Will webOS go with the new set-up, so that it can take advantage of the patents and licensing income?

Will HP continue to be the brand name on the devices this computer company spinoff would make?

These are just a few of the issues in a deal of untold complexity. But perhaps the most obvious one is who would get custody of Rubinstein?

To begin: Bradley is a big fan and would certainly want him around if there were a spinoff, said several sources.

But to do what?

Rubinstein, a well-known tech exec, had been leading the webOS efforts for HP, but was recently moved upstairs to a larger but fuzzy role, to run product development and innovation for the PSG unit. He has been reporting to Bradley.

At the time, the move was seen by many as the first step out the door by Rubinstein, with one person joking that “he’d much rather be at his Mexican beach house than HP.”

Among the disgruntlements: Several sources said Rubinstein felt that TouchPad wasn’t ready to ship and that Apotheker has reneged on a public promise not to until the tablet was “perfect.”

That ire is no surprise, since the device was then subject to tough criticism, including by AllThingsD’s Walt Mossberg, who noted in his review:

“… In my view, despite its attractive and different user interface, this first version is simply no match for the iPad. It suffers from poor battery life, a paucity of apps and other deficits.”

In addition, unlike others there, Rubinstein has been more of a product guy and not an HP lifer. That begs the question of whether he’d like to sign up to another big company stint, even if he had more control.

“He’s been to that party before, and the reality is that he is not a career big company person,” said one person.

One important note: Rubinstein was unable to make webOS work when Palm was already a standalone independent company. And, although a new HP spinoff would be huge and better funded, it is still very much an uphill and competitive battle on the computer, smartphone and tablet fronts.

In addition, keeping a competitive operating system going is also a costly bear of an issue.

“It’s a cyclical, high-velocity business and there are other huge players from Apple and Google in smartphones and tablets to Lenovo and Dell in PCs,” said another source. “There might be a lot of great products in the pipeline for webOS, but it will not be easy to make them a success.”

That said, noted another person who knows Rubinstein well, “he really cares about webOS and does not want to see it go away.”

That might be true, although that is just what might happen if HP decides to sell it off to someone else or makes the spinoff a difficult endeavor.

In that case, it’s an offer Bradley and Rubinstein can refuse.

Hewlett-Packard's PC Business: What Happens Next?

Arik Hesseldahl — Fri, 19 Aug 2011 12:00:43 +0000

The details are still unclear about exactly what Hewlett-Packard is going to do with its personal computer business.

There are many options, ranging from a spinout as an independent company, to a sale to a private equity firm, to, as CEO Léo Apotheker said on a conference call yesterday, no transaction at all. But two more likely scenarios stand out.

The first and most likely option would be for HP to spin off the PC business by creating a separate company and distributing the shares to investors.

The most obvious example to consider is that of Motorola, which split into two companies, Motorola Mobility and Motorola Solutions, at the beginning of this year. (Google has now bid $12.5 billion to acquire Motorola Mobility.)

There are specific advantages to doing it this way rather than selling. As a distribution to shareholders, there would be no tax impact to HP. In a sale, there would be taxes on the income from the sale of assets.

If a split is what ultimately happens, then there are lot of new questions. Who would run the new business? A leading candidate is Todd Bradley, who is currently the head of HP’s Personal Systems Group, and, coincidentally, was once the CEO of Palm. Bradley is a well-regarded executive and had been considered the most likely successor to former CEO Mark Hurd, before Hurd’s sudden resignation last year. Bradley was unsuccessfully recruited by Intel earlier this year. Having been passed over for the top job at HP, he now has a clear runway to be CEO of its spunout independent PC company if that’s what HP decides to do.

But what if HP doesn’t spin out, and decides to sell the unit instead? Who would buy it? Sources said that HP quietly shopped the PC division around earlier this year to companies in Asia, several of whom kicked the tires. In the weeks leading up to yesterday’s announcement, when conversation with various PC industry observers turned to HP, it wasn’t long before speculation of a sale would come up, soon followed by speculation about a possible buyer.

The most likely candidate in almost every one of those conversations was Samsung.

While Samsung isn’t a significant player in the PC business in North America, it is a more active player in Asia. And its other businesses, specifically its chip manufacturing operations, are deeply enmeshed in PCs. Samsung is the world’s biggest supplier of PC memory, or DRAM. It’s also the world’s largest supplier of flash memory, which is increasingly being used to build solid-state hard drives in PCs.

And since PCs have played an increasingly central part in the consumer business, it would fill a significant hole in Samsung’s lineup of televisions, phones, cameras and other electronic devices. And if there’s one thing that Samsung is good at, it is manufacturing products that carry thin profit margins, such as TVs.

HP’s Personal Systems group also did a $40 billion business last year, with an operating margin of four to five percent. Add to that HP’s status as the largest supplier of PCs to key retail outlets like Best Buy and Wal-Mart in the United States and numerous other retail outlets around the world, and the target becomes even more enticing.

What would it cost? As a business in decline, not much. Sales were about $40 billion in 2010, and are on track to be about $32 billion this year. Analysts note that as a shrinking business it wouldn’t command much if any premium, and might even sell for about half of 2011 sales. That yields a price in the $16 billion to $20 billion range.

This would be smaller than what Dell trades at right now, which, at a market cap of $26 billion, is about eight times trailing earnings, but is valued at a startling 0.4 times the current year’s expected revenue of $64 billion.

Many wonder why the process HP has outlined will take 12 to 18 months.

Complexity, for one thing. HP’s PC business is made up of lots of little parts around the world, all of which will have to be rolled into one legal entity. Then there’s the matter of figuring out which people and assets belong to the PC unit and not the printing unit.

Sources said HP has hired Perella Weinberg Partners as its financial advisor; and two law firms — Gibson, Dunn & Crutcher and Skadden, Arps, Slate, Meagher & Flom — as its legal advisers for the effort.

Finally, given the events of yesterday and HP’s history as one of Silicon Valley’s most important companies, it’s worth listening to Léo Apotheker’s explanation for all this in full.

I recorded the conference call, and was particularly struck by, at the beginning, the detail of his explanation of all the many moving pieces. It’s a statement that lasts about 15 minutes. I’ve trimmed that from the recording of the full call and embedded it below.

One thing is clear: For better or worse, it is the start of a process that will lead to an entirely new HP.

Leospeaks81811 by ahess247

HP and webOS: But They Seemed So Happy Together!

John Paczkowski — Thu, 18 Aug 2011 20:30:33 +0000

“It’s our first day together, but it’s already abundantly clear to everyone who’s been involved in bringing the two companies together that great things are in store. The combination of Palm’s trailblazing webOS and Hewlett-Packard’s strength as the leading provider of everything from PCs, laptops, and printers to home electronics and enterprise systems promises an amazing roadmap of new tools for your mobile and web-connected future.”

Those words, posted to the official Palm blog a little over a year ago, are rich with irony today given the news that HP is pulling the plug on its webOS hardware business and mulling the divestiture or spinoff of its PC business.

How quickly things change, right?

“With HP’s full backing and global strengths, I’m confident that webOS will be able to reach its full potential. This agreement will accelerate the development of this incredible platform with new resources, scale and support from a world-respected brand.”

– former Palm CEO Jon Rubinstein, July 1, 2010

Particularly for HP, which just weeks ago was talking up the importance of webOS to its core business, reiterating a message delivered by HP Executive Vice President Todd Bradley back in Feburary at the company’s big TouchPad unveiling.

“We have a commitment to expand the webOS platform to other devices and form factors you haven’t seen before,” Bradley said then. “And we’re going to do this across the broadest base of devices we can. … I’m pleased to announce today that we plan to extend webOS to the HP PC. Introducing webOS to our PC customers later this year will drastically expand the platform, for us and for our developers.”

What happened between February and August? Hell, what happened between July and August, after Bradley told AllThingsD’s Ina Fried that HP was committed to a broad webOS lineup? WebOS was supposed to be HP’s big consumer platform push. It was supposed to give us super powers! And the TouchPad was supposed to be Russell Brand’s butler (see video below)!

Evidently, HP drastically rethought that commitment. Which raises the question: Was Palm worth the $1.2 billion HP paid for it? It certainly doesn’t look that way today.

OuchPad: Best Buy Sitting on a Pile of Unsold HP Tablets

Arik Hesseldahl — Wed, 17 Aug 2011 00:32:21 +0000

There have been plenty of hints that Hewlett-Packard’s TouchPad isn’t selling well. First there was a $50 discount. Then there were spot discounts of $100 at outlets like Costco. Then the $100 discount became permanent. Adding insult to apparent injury, a deal on Woot for $120 off an entry-level 16 gigabyte TouchPad netted all of 612 takers.

With HP set to report quarterly earnings tomorrow, sources familiar with the matter tell AllThingsD that TouchPad sales are failing yet another critical test: Sales at big-box consumer electronics retailer Best Buy.

According to one source who has seen internal HP reports, Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory.

A second person who has seen Best Buy’s TouchPad sales figures confirmed the results as “consistent with what I’ve seen,” and went so far as to say that 25,000 sold might be “charitable.” This source suggested that the 25,000-unit sales number may not account for units that consumers return to stores for a refund.

Best Buy, sources tell us, is so unhappy that it has told HP it is unwilling to pay for all the TouchPads taking up expensive space in its stores and warehouses, and wants HP to take them back. HP, for its part, is pleading with Best Buy to be patient. We’re also told that a senior HP executive, possibly executive VP Todd Bradley, is slated to travel to Minneapolis soon to discuss the matter with Best Buy executives.

These numbers are emerging just one day before HP is set to report quarterly earnings. While it’s possible that HP will choose not to disclose any unit-sales results for the TouchPad — because as yet they’re unlikely to be large enough to be material — if it does report anything on the subject, that will probably be a figure known in industry circles as “channel sales,” which are the number of units sold to stores like Best Buy and Costco. Channel sales don’t reflect sales to end customers, known as “sell-through.”

HP declined to comment, as did Best Buy.

There’s more. TouchPad sales aren’t only failing to catch on at Best Buy, but also at other retailers, including Wal-Mart, Micro Center and Fry’s, says analyst Rich Doherty, head of the Envisioneering Group. Doherty says that spot interviews at stores on both coasts show that HP’s “wildcat pricing moves” on the TouchPad have prompted consumers to wait and see what happens in the next few months.

“After the initial surge of interest after the July release, all those price promotions have caused consumers interested in buying a TouchPad to pause, because they think the price is going to fall further,” Doherty told me.

For the record, the TouchPad costs $399.99 for the 16GB model and $499.99 for the 32GB version. Both started at prices exactly $100 higher when first announced in June.

So what’s HP’s next move? Doherty says that with the back-to-school PC buying season underway, HP will likely use its leverage as one of Best Buy’s top suppliers — the other is Samsung — to offer bundle deals: Buy an HP computer, get the TouchPad for a special price.

Another Day, Another Shake-Up at Hewlett-Packard

Arik Hesseldahl — Mon, 11 Jul 2011 21:37:53 +0000

Hewlett-Packard just announced another management shakeup. Stephen DiFranco has been named senior vice president and general manager for the Americas region of its Personal Systems Group (PSG), reporting to Todd Bradley, executive vice president of PSG.

DiFranco will replace Stephen DeWitt, who’s being moved over to run the webOS business unit. That unit is becoming increasingly important to the PSG now that webOS, the operating system HP got when it acquired Palm last year, will be put in PCs in addition to phones and tablets like the TouchPad.

Bloomberg News says that Jon Rubinstein, the former Palm CEO, will run product development for the PSG unit. DeWitt will run a new unit focusing on pushing webOS. Both will report to Bradley, who was himself once the CEO of Palm during a period when it was called PalmOne, and joined HP in 2005. Bradley has also recently been handed responsibility for building HP’s business in China.

It’s the latest in a series of moves by CEO Léo Apotheker to put his brand on HP’s operations. The last shake-up was about a month ago, when CEO Peter Bocian, CIO Randy Mott, and executive vice president Ann Livermore stepped down, and Livermore joined HP’s board of directors. And as reported earlier today, Bocian landed at J.P. Morgan Chase.

DiFranco had been in charge of HP’s Solutions Partner Organization (SPO), and he’ll continue to oversee SPO until a replacement is found. DiFranco’s new brief will be to run marketing, sales and operations of PSG in HP’s premier markets, the United States, Canada and Latin America, including both consumer and business PCs, phones and tablets.

What the TouchPad Launch Says About HP's webOS Ambitions

Ina Fried — Wed, 06 Jul 2011 13:00:11 +0000

Hewlett-Packard has a lot riding on the launch of the TouchPad.

The tablet, which went on sale last week, doesn’t just represent HP’s effort to take on the iPad. It’s also the start of what the company hopes will be a renaissance for webOS, the operating system HP acquired with its acquisition of Palm a year ago.

Perhaps the high stakes are what prompted webOS unit head Jon Rubinstein to pen a memo to troops in the wake of tough reviews for the TouchPad. In the memo, which was obtained by PreCentral.net, Rubinstein notes that other eventual hits, such as Mac OS X, also arrived to a mixed reception.

“We still have work to do to make webOS the platform we know it can be, but remember … it’s a marathon, not a sprint,” Rubinstein told his team.

HP declined to comment on the Rubinstein memo.

In recent interviews HP executives have talked about the importance of webOS to the core of the company’s business. HP is counting on webOS to power a range of devices, from future tablets to the Pre3 and other smartphones. HP is also looking to boost the operating system’s presence by making it available on printers as well as from within its Windows PCs.

“We’ve got lots of capabilities that we have to bring to scale,” HP Executive Vice President Todd Bradley told AllThingsD. “We’ve just got to do it.”

Bradley wouldn’t commit to a schedule for when future devices would hit the market after the already announced Pre3, but he said the company is committed to a broad webOS lineup.

In recent weeks, HP has also indicated that it is open to licensing webOS to other device makers as well, a position voiced by CEO Léo Apotheker during his appearance at last month’s D9 conference.

“Our focus always has been to make webOS available to partners that expand the ecosystem, and we will continue to be open to that,” Bradley said. Of course, Bradley doesn’t need a reminder that licensing an operating system while using it in one’s own products can be a tricky proposition. Bradley learned that firsthand during his own stint as head of Palm. Rather than license the OS to companies that would compete head-on with HP’s webOS products, Bradley suggests that the company is most interested in licensing to companies that would take webOS in a new direction.

“That’s exactly what we would look for, someone who would go in spaces that we are not in,” Bradley said.

[ See post to watch video ]

In the meantime, HP faces the formidable task of trying to get developers to write software for webOS, even as the base of devices running the software remains relatively small. On the tablet side, the TouchPad launched with just a few hundred apps, while webOS boasts a few thousand phone apps. That compares to more than 100,000 apps for the iPad and several hundred thousand apps for both the iPhone and Android phones.

The arrival of the TouchPad allows HP to transfer its talk into reality for the developers it is aiming to woo.

“We’ve actually been putting a lot of devices in the hands of developers over the last few weeks,” said Richard Kerris, the former Apple executive who now heads HP’s developer relations efforts for webOS. “The response back has been very, very positive. They can see the trajectory that the company is on.”

Kerris said that most developers are interested, though some are taking a wait-and-see approach.

“We’ve not had any developers say we don’t want to be on your platform,” Kerris said.

The company is also aiming to appeal to the smallest of developers, even encouraging hobbyists to tinker around with the core operating system in ways frowned upon on other platforms.

“You can get down to the root core of the operating system and can do some neat things,” Kerris said. “We don’t call that a jailbreak. We call that homebrew and that’s fine.”

HP PC unit CTO Phil McKinney took a prototype of the TouchPad to the recent Maker Faire event, showing off how the tablet could be used to control temperature by turning on lights or a fan.

One option that HP says it is unwilling to pursue is the path of paying developers to port their apps to webOS.

“HP has a lot of money, but we strategically and philosophically did not want to do the pay-to-port route,” Kerris said. “Historically, I’ve never seen that work.”

That said, Kerris is convinced that the resources of HP will allow webOS to succeed in ways that it never did as part of an independent Palm.

“In the past Palm was like a ‘Little Engine That Could,’” he said. “Now it is a completely different ballgame.”

AMD Hires Its New CIO Away From Hewlett-Packard

Arik Hesseldahl — Mon, 21 Mar 2011 23:20:21 +0000

Executives from Hewlett-Packard certainly seem to be in demand from other companies these days, and prospective poachers are clearly having better luck in their recruiting than others. On the same day that reports emerged that chipmaker Intel had unsuccessfully courted Todd Bradley, head of HP’s $41 billion personal systems group for a job that might have led to his being tapped as Paul Otellini’s successor, now we learn that Intel rival Advanced Micro Devices has hired its new CIO away from HP.

His name is Michael Wolfe. He’s 52 and has worked for HP for five years, most recently as VP for Information Technology. This will be his second go as a CIO. Before his stint at HP, he spent 24 years at Motorola’s Semiconductor Unit and was CIO during the period it was spun out to become Freescale Semiconductor.

His new boss, AMD’s interim CEO Thomas Seifert, had high praise. “Mike has effectively led IT transformations constantly focusing on reducing operating costs and significantly improving business innovation,” he said in a statement. “His considerable talent and experience will help AMD to continue strengthening our IT infrastructure and streamline our business based on our own products and platforms.”

This hiring is taking place against the backdrop of the complicated, difficult search for a new CEO at AMD following the surprise resignation of Dirk Meyer in January. COO Robert Rivet soon followed.

AMD shares haven’t moved much since then, and it has been the subject of recurring problematic buyout rumors. Today the shares closed at $8.55, unchanged from the prior session, and that’s up only a nickel from where it was at the start of the year. Shares fell five cents in after-hours trading. Investors seem to consider AMD a company in a holding pattern until there’s some resolution in the corner office.

Intel Courted HP Executive

Don Clark and Joann S. Lublin — Mon, 21 Mar 2011 14:40:37 +0000

Intel Corp., which long has chosen internal candidates for most of its top management jobs, recently negotiated with a prominent Hewlett-Packard Co. executive about taking a senior position at the chip maker, people familiar with the matter said.

The executive–Todd Bradley, who heads HP’s personal-computer business–decided earlier this month to remain with the company, the people said.

But the negotiations underscore Intel’s willingness to consider unusual measures to strengthen its management ranks as the company faces the difficult task of identifying an eventual successor to Chief Executive Paul Otellini. An executive vice president regarded as the most likely candidate among Intel’s top managers, Sean Maloney, is recovering from a stroke he suffered a year ago. Another potential candidate, Patrick Gelsinger, left Intel in 2009 to join EMC Corp.

Read the rest of this post on the original site »

HP Introduces webOS TouchPad Tablet, New Phones

John Paczkowski — Wed, 09 Feb 2011 17:30:16 +0000

Palm gets its second chance at a rise-from-the-ashes rebirth today–this time under Hewlett-Packard’s aegis. At an invitation-only event in San Francisco (wisely scheduled after the CES tablet deluge of 2011), HP will uncrate its first webOS hardware since its acquistion of Palm. Among the products expected to be unveiled–the long-rumored “PalmPad” and perhaps a new smartphone or two. Certainly that’s what HP Personal Systems Group Executive VP Todd Bradley’s been hinting at recently.

“We are focused on the tablet market and we’re focused on enabling it with webOS,” he said back in January. “But we think of the tablet as one piece of a broader ecosystem, one piece of the connected experience we’re going to create….As we think about webOS and how it enables everything from smartphones to tablets to PCs to potentially other large-screen devices, we see an enormous opportunity, both for ourselves and for our customers, to get the best Web experience, the best content experience, that they can.”

Join us here at 10:00 am PT and find out if he’s right.

9:51 am: HP’s pulled together quite an…Apple-esque event for us today. Herbst Pavilion is adorned with massive HP banners and inside, the media and analysts gathered here are mingling beneath atmospheric blue lights. Noticeably absent: any–and I mean any–sign of the Palm brand.

9:59 am: A quick spoiler ahead of the event, which should start any moment now: The tablet HP will be showing off today is called the HP TouchPad.

10:02 am: One decidedly un-Apple-esque element of today’s presentation: The music selection. No Beatles, Dylan or Clapton. Just borderline unbearable club music/electronica.

10:05 am: Ah. The refrain in the aforementioned unbearable soundtrack: “One touch is never enough…been waiting such a long time.” Wonder if HP commissioned it. If they did, I hope they didn’t pay too much.

10:10 am: Looks like we’ve got a packed room. The Palm developer community in its entirety (snicker)?

10:16 am: And here’s Bradley to kick things off.

10:16 am: Bradley: I’d like you think back to that moment in time when you experienced something for the first time. I vividly recall the first time I drove a whisper-quiet electronic car…my first video conference. We should all witness as many of these firsts as we can in our lifetime. At HP, we’re about creating these firsts.

10:18 am: Bradley talks up connected experiences and claims that HP will soon begin delivering robust ones to folks around the world.

10:19 am: Now a quick historical overview of HP tech: The first pocket calculator, the first ink jet printer.

10:19 am: Talking about HP’s scale now and the size of the market for connected devices. Bradley says the connected devices market is $160 billion and growing.

10:21 am: So how do we bring HP’s scale to webOS development efforts, Bradley asks, before recounting how the company has brought its engineering heft and resources to bear on the OS. “We keep the tools in the garage unlocked,” he says.

10:22 am: Quoting Packard now, “The reason for a company to exist is to make a contribution.”

10:23 am: We’ve seen a proliferation of devices, says Bradley, and an explosion in content and services. But no one before today has come forward with a solution that provides a continuous experience across devices…a solution that gives you access to your digital universe regardless of which device you use.

That’s our intention with webOS devices.

10:24 am: “You know the afternoon I first saw what we can do with WebOS across a range of devices was really one of those firsts I referred to earlier.”

And with that, Bradley welcomes Jon Rubinstein to the stage.

10:26 am: Today marks an important new beginning for us, says Ruby. “We began building webOS five years ago. It’s been a little over two years since we launched the Pre.”

He continues, citing various compliments webOS has received in the media.

10:29 am: Rubinstein remarks that the smartphone industry seems to be headed toward larger and larger devices. HP has evidently chosen to go in the opposite direction.

“We’ve been thinking small,” says Rubinstein. And with that he announces the HP Veer, a tiny credit-card-size webOS phone.

Full slide-out QWERTY keyboard
2.6 inch, 320 by 400 touch display
5 megapixel camera
HSPA+
8GB storage
Snapdragon 7230/800 MZ
HP mobile hotspot

“Never before has a smartphone done so much and felt so little.”

Veer will be available in early Spring.

10:33 am: And here’s another device: The Pre 3, “a powerful smartphone for professionals.”

10:34 am: Pre3 is a thin portrait slider, largest QWERTY keyboard in the line-up. 3.6-inch, 480×800 screen. Supports HD video, HSPA+ and EVDO RevA; world phone; 8GB or 16GB

10:36 am: “This is a phone that’s built for serious speed and serious fun,” says Rubinstein, adding that the device will be available this summer.

Both new webOS phones are Touchstone compatible. They’re also context aware and will display information based on where they’re docked (not entirely sure what that means yet).

10:37 am: Moving on to the Think Big portion of today’s event: The HP TouchPad, the first device in the TouchPad family.

10:38 am: It weighs a little more than a pound and a half, just 13.7 mm thick.

9.7 inch, 1024×768 display
1.3 megapixel webcam
Beats audio
16 or 32 GB storage
Gyro, accelerometer and compass
Uses Qualcomm’s newest dual-core 1.2GZ Snapdragon processor.

“The TouchPad is screaming fast,” says Rubinstein.

10:40 am: So how will the TouchPad distinguish itself in the increasingly crowded tablet market? WebOS is the key here, says Rubinstein, noting the operating system’s powerful multitasking features, “an unmatched email experience” and Synergy.

If you own a webOS phone, all you have to do is enter your webOS user ID into the TouchPad and it will sync all your contacts, calendars, email, etc.

10:42 am: TouchPad comes bundled with Quickoffice for editing Microsoft docs. It suppors VPN, video calling, wireless printing and Adobe Flash.

10:43 am: Content-wise, the device supports the standard fare–movies, TV, books, magazine subscriptions, etc.

10:44 am: HP will roll the TouchPad out with some slick accessories: A case that doubles as a stand and a keyboard.

10:45 am: Rubinstein calls product manager Sachin Kansal to the stage to show off some of these devices’ features in depth.

10:46 am: First up, webOS exhibition mode, which displays photos or calendar while charging on a Touchstone.

10:47 am: Next, the TouchPad. Hardware looks pretty slick

Kansal demonstrates a reply to a text message showing up simultaneously on the TouchPad and Pre3 via Synergy.

10:48 am: Touting webOS’s multitasking features now. Swiping across a range of open applications that have been left open for use.

10:50 am: New feature: Card stacks–the ability to stack related windows on top of one another. A shopping list in notepad and a browser window open to one of the stores at which you plan to shop, for example.

10:51 am: Mail app seems to be having a little trouble rendering HTML

10:52 am: That said, webOS’s mail app does seem to be robust and elegant as well, particularly with Synergy working in the background to sync everything across multiple devices.

10:52 am: Nice multi-select feature in mail that allows for easy inbox purging.

10:53 am: Really talking up multitasking on the TouchPad.

“In webOS, multitasking was not an afterthought, it was a key feature we developed from the very beginning,” says Kansal, in a pointed jab at Apple.

10:56 am: Now a quick Flash demo. “Kung Fu Panda” preview. Looks fine and, remarkably, plays seamlessly without crashing the device.

10:57 am: Now on to in-app notifications. Unobtrusive and easily navigated and managed. Tap a notification and it launches the app you need to address it. Tap it again to delete the notification from the queue.

10:59 am: TouchPad keyboard includes numbers and letters on the same screen. Handy. Also something the iPad doesn’t offer.

11:00 am: Deep social networking integration. Twitter, Facebook, LinkedIn, etc., integrated into not just your address book, but photos as well. Connected photo albums allow users to view Facebook photo albums and the like within webOS’s photo app.

Quick demo of wireless printing from a connected photo album. “It just works,” says Kansal in an unintentional nod to an unmentioned rival.

11:03 am: Kansal says webOS has had a lot of success in building HTML 5 applications, but also a lot of success with Open GL games.

He demos a flight simulator/combat game that looks decent enough. Not Unreal-engine quality, but pretty good.

11:05 am: Moving on now to magazine subscriptions. A quick scroll through Sports Illustrated. “While on the one hand we are partnering with leading publishers like Time Inc. for magazines, we also want webOS to be a great platform for books, which is why we’re partnering with Amazon to bring Kindle to the TouchPad.

11:06 am: Standard Kindle reading experience, quick access to all Kindle controls and syncing with your Kindle libraries.

Ha. Kindle demo interrupted by phone call from Rubinstein. “Hey, you’re doing a great job out there. You know what, let’s switch to video.”

And there’s Rubinstein in a video call. Transition seems absolutely seamless.

11:09 am: Impressive demo so far.

Now this is interesting. Kansal pulls up a restaurant Web site on the TouchPad. He then takes his Pre 3 and places it on the TouchPad screen and the phone automatically launches a browser and directs it to the same restaurant Web site.

Very slick.

11:11 am: Rubinstein returns to the stage to talk about TouchPad partners. Among them: Dreamworks.

Rolling video of Dreamworks CEO Jeffrey Katzenberg recounting his experiences with the TouchPad. “HP has hit it out of the park,” he says before rehashing many of the features we’ve seen on display this morning.

“Seamless, integrated and intuitive.”

11:14 am: Uh oh. The Wi-Fi version of the TouchPad won’t be available until this summer, with a 3G version to follow.

Not the greatest shipping schedule, particularly if Apple brings the iPad 2 to market this spring as expected.

11:15 am: Moving on to the next partner: Qualcomm CEO Paul Jacobs.

“When you have the scale and size of a company like HP, you can work with anyone. And HP chose to work with us,” he says before rambling on about how fantastic Qualcomm and its wireless chips are.

11:18 am: Allow me to summarize Jacobs’s spiel in three words: Snapdragon is awesome.

11:21 am: Quick update from Jacobs: TouchPad is also awesome–even more awesome because it runs Qualcomm’s Snapdragon dual-core solution.

So what’s the device’s battery life like?

11:23 am: Ah. Jacobs just said Snapdragon enables “all day battery life.” Is that a euphemism for eight hours or six?

11:24 am: Rubinstein returns to the stage, talks up Beats by Dr. Dre, the audio system used in the TouchPad, and then welcomes Jimmy Iovine to the stage.

11:26 am: Iovine begins with a complaint about the degradation of audio quality that occurs between the recording studio and the PC. “Paul McCartney can record in the best studio in the world, but when you play his songs through a Dell computer it sounds like you’re listening to it through an old television.”

11:29 am: Today, the PC isn’t just a home stereo, but a tool for musicians–for recording and for performing, Iovine says. We should be demanding a better audio experience.

“HP is stepping forward. It wants to own music….The TouchPad is a musical instrument….Bottom line is that music is still the best app on the Internet and HP’s commitment to making it sound good is unparalleled. Working with them we’ve developed an audio solution that makes music feel and sound like it should….This is an incredible moment for the music industry.”

11:32 am: Steven McArthur, SVP of applications and services, takes the stage to talk about developers and application development.

“We’re expanding our footprint into a portfolio of world-class devices and we’re building the world’s largest platform of connected devices….HP is uniquely positioned to achieve this goal and webOS developers are uniquely positioned to take advantage of it.”

11:34 am: Talking up the Facebook app for webOS now.

Evidently, Facebook users rank the Facebook app for webOS as the best one on the market.

11:36 am: And now, Selfaware Games, purveyor of fine webOS card games enhanced with in-app payments. I’ve never played them, but Selfaware’s games look pretty rudimentary from the images on stage.

11:38 am: McArthur claims that the TouchPad will soon offer the best tablet gaming experience on the market. Hard to believe right now, given the webOS games I’ve seen to date, but you never know.

11:41 am: Rolling another video now. An overview of Time Inc. pubs, presumably with a cameo by a Time exec to follow.

11:42 am: And here’s a very excited Randall Rothenberg, chief digital officer of Time Inc.

11:44 am: Standard “Time and HP are both awesome” preamble.

Ah. Here’s a remark worth noting: “HP really understands the importance of maintaining our direct relationship with subscribers.”

Assume the “unlike Apple” is implied.

11:45 am: Demoing People mag on TouchPad. Talking up the device’s photo rendering and how that jibes with Time’s commitment to good photojournalism (not showcased particularly well by People, but …)

11:47 am: Moving on to Time magazine. Here the photo rendering stands out a bit more. Rothenberg’s right. The pictures look great.

When the TouchPad hits the market place, people will be able to download apps for Time, Fortune, People and Sports Illustrated.

11:49 am: An off-script anecdote from Rothenberg: “Thirty years ago when I was a very young journalist, I had the pleasure of meeting David Packard several times. He was very focused on innovation and American innovation, and all I can think of is that this day and devices like this represent his vision for how American innovation would inspire the global economy.”

11:51 am: Rothenberg says one in five adults will own a tablet by 2015.

11:52 am: Bradley returns to the stage to talk about big picture stuff. “We’re thinking beyond today,” he says. “We have a commitment to expand the webOS platform to other devices and form factors you haven’t seen before…. And we’re going to do this across the broadest base of devices we can….I’m pleased to announce today that we plan to extend webOS to the HP PC.”

11:56 am: “Introducing webOS to our PC customers later this year will drastically expand the platform, for us and for our developers.”

11:57 am: 11:57 am: This is obviously a huge shift for HP, which has been a Windows shop for a looong time now.

11:59 am: From a post I wrote earlier this year:

In Palm’s webOS, HP has an elegant OS that it controls, something the company–a longtime Windows shop–has never had before. And with it, it can begin untethering itself from Microsoft and differentiate its brand in a market in which most devices not sold by Apple are all running some variant of Windows. Remember, webOS is scalable. And while Palm lacked the means to scale it, HP does not. It’s one of the biggest tech companies in the world, and once it brings its engineering acumen and marketing heft to bear on the OS, my guess is we’ll see it evolve into a much larger platform that extends beyond smartphones to tablets, ultraportables and other connected devices. And HP, for the first time in its history, will be firmly in control of both its hardware and software.

12:00 pm: Rubinstein joins Bradley to wrap things up. Thanks the company, the webOS team and, oddly, some celebs in the audience–MC Hammer and Serena Williams.

Then another restatement of HP’s commitment to webOS and its plans to create this massive global ecosystem we’ve been hearing about all morning.

“With this versatile operating system on top of HP’s reach, we will create a vibrant global ecosystem for our developers, partners and customers.”

12:03 pm: One last video reel showing off the hardware announced today–Veer, Pre 3 and TouchPad–and the event concludes.

Expect webOS Tablet Announcement at HP's Special Event

John Paczkowski — Fri, 14 Jan 2011 11:50:15 +0000

If there were any lingering doubts over the focus of Hewlett-Packard’s Feb. 9 webOS event in San Francisco, HP Personal Systems Group Executive VP Todd Bradley has helpfully dispelled them.

Asked recently by CNBC’s Maria Bartiromo if HP’s got something in the pipeline that will “blow away” the iPad, Bradley replied, “You and I will talk about that on the 9th.” Which would seem to suggest that we’ll be seeing the long-rumored PalmPad– or Veer or Gyst, or whatever the hell HP is calling it–or at least hearing about it, come February.

Of course, there will likely be other hardware showcased as well. The invitation’s “Think big. Think small. Think beyond.” tagline says as much, and Bradley reiterated that during his CNBC interview. “We are focused on the tablet market and we’re focused on enabling it with webOS,” he said. “But we think of the tablet as one piece of a broader ecosystem, one piece of the connected experience we’re going to create…. As we think about webOS and how it enables everything from smartphones to tablets to PCs to potentially other large-screen devices, we see an enormous opportunity, both for ourselves and for our customers, to get the best Web experience, the best content experience, that they can.”

A heavy-handed sales pitch for webOS, I know, but note the range of devices Bradley conjurs up here and his implication that they are on the way. As I wrote in April of last year:

In Palm’s webOS, H-P has an elegant consumer level OS that it controls, something the company–a longtime Windows shop–hasn’t really had before. And with it, it can begin untethering itself from Microsoft and differentiate its brand in a market in which most devices not sold by Apple are all running some variant of Windows. Remember, webOS is scalable. And while Palm lacked the means to scale it, H-P does not. It’s one of the biggest tech companies in the world, and once it brings its engineering acumen and marketing heft to bear on the OS, my guess is we’ll see it evolve into a much larger platform that extends beyond smartphones to tablets, ultraportables and other connected devices. And H-P, for the first time in its history, will be firmly in control of both its hardware and software.

Here’s Bradley’s CNBC interview in full.

Welch to HP Board: You Don't Know Jack!

John Paczkowski — Tue, 05 Oct 2010 21:08:58 +0000

Well, look at that, Jack Welch just one-upped Larry Ellison in the HP-bashing game. The master manager unloaded on the company today during a series of interviews at the World Business Forum, slagging HP’s board for mishandling its CEOs and the company’s management succession plans.

“The Hewlett-Packard board has committed sins over the last 10 years,” the former GE CEO told The Wall Street Journal. “They have not done one of the primary jobs of a board, which is to prepare the next generation of leadership….They end up blowing up the CEOs and don’t have anyone else in mind to come in. Where the hell was the leadership development? Who are these board members?”

Interestingly, Welch (pictured above, measuring his respect for HP’s directors) seems particularly annoyed that HP passed over Todd Bradley, executive VP of the company’s Personal Systems Group and a former GE employee, for the top job. In a second interview with Bloomberg TV, he lambasted HP for hiring yet another outsider as CEO and wondered aloud why the company didn’t just hire Bradley.

“It tells you that they haven’t done the management development job,” he said. “Look, they hired Carly before Mark Hurd, so this is the second time that they’ve had to do that. You know Todd Bradley is out there and Todd Bradley worked for us at GE and Todd Bradley is a very good guy. Somehow or other he wasn’t picked. I don’t know any of the dynamics. So they chose to change the game again. This is their third outside CEO in eight years or something like that. It is obviously a board that isn’t thinking about management succession internally for a long time.”

Asked by the Journal if he knows any HP board members, Welch said, “I wouldn’t admit it if I did.”

Harsh words coming from the guy who was named “Manager of the Century” by Fortune magazine in 1999.

PREVIOUSLY:

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