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Whitman's challenge: An inside view of HP
Rick Merritt
9/23/2011 6:23 PM EDT
No doubt Hewlett-Packard Co. employees have plenty of thoughts about the company's latest CEO appointment. One HP employee, he asked not to be named for obvious reasons, shared some candid thoughts about what it's like to now be working for HP's fourth chief executive since 2005.
Below are some of them, mixed with some editor notes for perspective.
Note: HP CEOs Carly Fiorina (2000-2005) and Mark Hurd (2006-2010) were paid severance packages estimated at $21 million and about $40 million respectively.
"We are not rich; we are hard working. We don't have golden parachutes and get paid millions for our mistakes. Our futures are tied into the success of HP. But in the past 10 years we have suffered CEOs who focus on their bonuses not on rebuilding the best company Silicon Valley ever produced—stop screwing up our futures!"
Note: HP's stock price, which closed down slightly at $22.62 Friday (Sept. 23), is actually slightly above where it was 10 years ago. But after peaking above $50 in 2010, the share price has steadily eroded much of this year.
"HP stock is one of the worst performing stocks since the tech bubble burst. For those that are in this for the long game, like all of the employees, it has been a disaster from Carly Fiorina onward."
Note: HP acquired Palm for $1.2 billion in April 2010 and discontinued its products in August 2011. It has bid $11.7 billion for server software developer Autonomy. In November 2009 it acquired 3Com for $2.7 billion.
"Stop overpaying for acquisitions. HP has limited cash and unlike IBM who has been making many modest purchases, HP has been placing major bets at high premiums with unclear ROI."
"Palm was a bad purchase from the start and everyone knew it. Hurd made a major strategic mistake tackling a fourth technology [WebOS] when the market can only support three--iOS, Android, and Windows. We all knew it yet no one would listen to the feedback."
Note: Former CEO Leo Apotheker (2010-2011) announced on August 18 that HP is considering spinning off its PC business. HP's new CEO Meg Whitman said the board of directors will make a decision before the end of the year.
"Don't spin off the PC business, transform it. Don't tie its future to Intel and Microsoft. Find meaningful ways to differentiate its products. Let engineers take real and significant risks."
More advice for the HP powers that be:
"Stop cutting R&D and accept a lower profit margin for a bit and invest to win. There are many great ideas that need to be funded. Open the wallets and let the engineers create them."
"Learn from the line engineers not just the executives. Sit down and have frank discussions that focus on the people doing the day-to-day jobs and why they matter. Innovation is occurring at many levels."
"Learn the HP Way. It was developed by strong leaders who understood business and people. Most of us doubt [recent CEOs] learned just how strong and tough our founders were and why people treated them with so much more respect and loyalty. Carly Fiorina and Mark Hurd were powerful and strong in many ways but they were not wise."
"Get a board of directors that has a clue. Their problems have gone public and instead of facing them openly and honestly, they have let things fester. They are to blame for the poor outcomes under Fiorina, Hurd, and now Apotheker."
So this engineer had plenty to say. Others we have reached out to have been slow to respond. We'd love to add more voices to this discussion. Are you a current or former HPer with something to say about the company's direction or the revolving door in the corner office? Or maybe just an observer who has watched with interest the goings on at what is arguable Silicon Valley's most famous company? Add your voice.
Below are some of them, mixed with some editor notes for perspective.
Note: HP CEOs Carly Fiorina (2000-2005) and Mark Hurd (2006-2010) were paid severance packages estimated at $21 million and about $40 million respectively.
"We are not rich; we are hard working. We don't have golden parachutes and get paid millions for our mistakes. Our futures are tied into the success of HP. But in the past 10 years we have suffered CEOs who focus on their bonuses not on rebuilding the best company Silicon Valley ever produced—stop screwing up our futures!"
Note: HP's stock price, which closed down slightly at $22.62 Friday (Sept. 23), is actually slightly above where it was 10 years ago. But after peaking above $50 in 2010, the share price has steadily eroded much of this year.
"HP stock is one of the worst performing stocks since the tech bubble burst. For those that are in this for the long game, like all of the employees, it has been a disaster from Carly Fiorina onward."
Note: HP acquired Palm for $1.2 billion in April 2010 and discontinued its products in August 2011. It has bid $11.7 billion for server software developer Autonomy. In November 2009 it acquired 3Com for $2.7 billion.
"Stop overpaying for acquisitions. HP has limited cash and unlike IBM who has been making many modest purchases, HP has been placing major bets at high premiums with unclear ROI."
"Palm was a bad purchase from the start and everyone knew it. Hurd made a major strategic mistake tackling a fourth technology [WebOS] when the market can only support three--iOS, Android, and Windows. We all knew it yet no one would listen to the feedback."
Note: Former CEO Leo Apotheker (2010-2011) announced on August 18 that HP is considering spinning off its PC business. HP's new CEO Meg Whitman said the board of directors will make a decision before the end of the year.
"Don't spin off the PC business, transform it. Don't tie its future to Intel and Microsoft. Find meaningful ways to differentiate its products. Let engineers take real and significant risks."
More advice for the HP powers that be:
"Stop cutting R&D and accept a lower profit margin for a bit and invest to win. There are many great ideas that need to be funded. Open the wallets and let the engineers create them."
"Learn from the line engineers not just the executives. Sit down and have frank discussions that focus on the people doing the day-to-day jobs and why they matter. Innovation is occurring at many levels."
"Learn the HP Way. It was developed by strong leaders who understood business and people. Most of us doubt [recent CEOs] learned just how strong and tough our founders were and why people treated them with so much more respect and loyalty. Carly Fiorina and Mark Hurd were powerful and strong in many ways but they were not wise."
"Get a board of directors that has a clue. Their problems have gone public and instead of facing them openly and honestly, they have let things fester. They are to blame for the poor outcomes under Fiorina, Hurd, and now Apotheker."
So this engineer had plenty to say. Others we have reached out to have been slow to respond. We'd love to add more voices to this discussion. Are you a current or former HPer with something to say about the company's direction or the revolving door in the corner office? Or maybe just an observer who has watched with interest the goings on at what is arguable Silicon Valley's most famous company? Add your voice.
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hm
9/23/2011 7:10 PM EDT
I agree with HP employee and editor. It is diffucult to understands lack luster performance from HP. It is harsh time and we wish best for HP and new CEO.
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goafrit
9/23/2011 9:34 PM EDT
Good luck lady. But this could be the one that will destroy your business resume. HP is toxic. But good luck
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Charles.Desassure
9/24/2011 5:11 AM EDT
Yes, I agree with everyone else; but I believe that this CEO will have the right stuff to bring HP back to the main playing field. Remember this posting, I wrote it first. There are many good reasons. But it is HP time.
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wilber_xbox
9/24/2011 11:57 PM EDT
maybe the lady luck smile for HP with Whitman. Even then she has to fix a mess in HP.
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agk
9/25/2011 3:16 AM EDT
I feel that when HP had the instruments division combined with them they were doing well.After it was named as Agilent half the power is left out. ANy way now HP needs to view this in a commercial way more than that of technology based.Learn it from others by watching them.
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David Ashton
9/25/2011 5:15 AM EDT
HP spun off its instrument division (as Agilent) to concentrate on PCs. If they now spin off the PC business, what is going to be left?
A great pity...with engineers in charge it was, as above "the best company Silicon Valley ever produced". With bean counters running it, it's gone nowhere but down, it seems.
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DrQuine
9/25/2011 1:06 PM EDT
I hope that HP can leave the headlines as a company in transition and return to their roots as an innovation giant. Bloomberg Business Week (Sept 12, 2011 page 42) reported that the HP 12c financial calculator is now 30 years old and is still only one of two calculators allowed on the CPA exam. That ongoing legacy illustrates the kind of innovation that HP used to be famous for.
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Traces
9/26/2011 6:07 AM EDT
If you haven't been following the calculators closely, a short summary:
1. The high-water point of HP calculators is generally considered to be ~ the 48 or perhaps sooner, which was 20 years ago.
2. The 35 is a marked improvement from the complete crap they've been making lately (33, I'm talking to you), but it's still no 48. It's also sad that it's "retro" styled. It's as if they're saying that they believe the good stuff was in the past, too.
3. In short, even the calculator business derived vital cross-fertilization from the test equipment business, and has been treading water (at best) since.
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ReneCardenas
9/26/2011 9:11 AM EDT
I do not see what remains of HP as the swift and talented pool of engineers that once was, capable of challenging any Server, PC, Notebook, PDA OEM and out performing them. However, today the world is another more challenging world for HP bean-counters, with reduced profit margins their competition are eating thier lunch.
I do not see even a sliver of a brigth future for them.
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therealjg
9/26/2011 1:27 PM EDT
Among Whitman's challenges not yet mentioned:
* Rampant political correctness in policy, promotion, hiring, firing. Sorry, but PC is not a strength when it comes to creating marvellous tech. Brilliant engineers are a handful to deal with, and no respecters of sacred cows - so they've been dealt out, in favor of political types. Smaaart.
* Thoroughly demoralized workforce. Recent conversation with a psychiatrist: "Oh, you've escaped HP? Great! All my best customers come from there."
* Aging workforce. Newest employee network: YEN. Stands for, "Young Employee Network." I was a young guy out of college in 1985, and still a young guy when I departed in 2005.
* No resolve. HP's "whitespace" business development metrics, ca 2001: 1. Must be g.t. 1B$. 2. Must be low risk. 3. Must be achievable by a small team. 4. Must be profitable in 2 yrs. Hello? Any small team with that kind of opportunity would be calling a VC, not talking to HP Corporate.
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XPin
9/28/2011 6:05 PM EDT
I was a HW Design/Engineer Architect in HP's printer division for 10 yrs before falling into one of Mark Hurd's work force reduction cycles. I was privledged to have worked with some of the finest engineers I had ever crossed paths with. Many of them had even had the opportunity to shake Bill and Dave's hands as they regularly made the rounds.
I was involved w/ many innovative products that we took to the point just prior to production release, but were then canceled because, from the engineer perspective, the bean-counters were only focused on the immediate return rather than the long term ROI. I see some products out on the market now from other companies that so closely resemble programs that were canceled at HP that the only thing I can say is that starting with Carly, the CEO and board lost their vision as to what the future could be if they trusted the vision and innovative engineers that they had.
As an HW architect w/ HP I often went to ESC to look at the new technologies that were becoming available to see if they could be leveraged. Excitement for the new technology was often replaced w/ disappointment when I was told that these technologies and methodologies were to risky to invest in. Sadly, after talking with my colleagues that are still there, it hasn't changed since I left 2+ yrs ago.
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factor10mm
9/30/2011 1:19 PM EDT
Take a look at the CEOs: Bill:MSEE Dave:MSEE John Young:BSEE Lew Platt:BSME/MBA Carly:BA Medieval History and Philosophy/MBA Mark:BA BusAd. Even Ned at Agilent, the $8B startup: BSEE/MSEE. HP rose to be the respected Silicon Valley powerhouse it was when engineers, who understood engineering and real risk, were at the helm. I joined HP in 1988, then got spun off with A. HP kept the name because it had name recognition in a more lucrative market (PCs and printers) than in test & measurement, the company's roots. Note, Carly was the first CEO hired from the 'outside,' too, as well as the first non-engineer.
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