Is Hurd funding IPG's Demise with IPG's Revenue?

In a very interesting article by Ned Randolph at NewsFactor, he discusses HP's move into other, non-traditional printing areas like Photo Kiosks and on-demand, uniquely individualized newspapers.

Buried toward the end of the article is a quote from Gary Peterson, a principal analyst with Gap Intelligence in San Diego.

"... the printing industry is a mature one, and there is a movement within HP to use IPG's 18.5 percent profit margin not to grow the printing segment, but move it into IT services, where IBM Relevant Products/Services dominates..."


Peterson goes on, "What we've seen from (CEO) Mark Hurd is that he's very interested in infrastructure Relevant Products/Services services. He wants to slowly evolve HP into IBM."

And they're using IPG profits to power Relevant Products/Services that transition, he said.

"It's really a matter of IPG funding the transitional costs of acquiring EDS and funding how that division of HP grows and succeeds," he said. "They purchased EDS to get a better foothold in the enterprise Relevant Products/Services market."

For example, when IBM approaches a huge company like General Motors, it can give them high-level customized server Relevant Products/Services, software, hardware and support..."

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Over the past few months, HP has overtaken Dell in laptops, purchased EDS and is actively working with Intel and the G6 - CISCO is getting into servers now as well.

It isn't like HP is going to leave the printer and output space completely, just come at it from a different direction.

HP: Pay Cuts and no 401k - and still the State of California gets Away with Stealing

In a communique dispatched via email, Hurd explains how cutting the base pay for all its employees will soften his conversation with "analysts and investors..." Hurd will take a 20 percent pay cut to his base pay.

Here is the text:

Today, HP announced first quarter results amid one of most difficult economic downturns that any of us has ever faced. I am proud to say that we continue to execute well in this very challenging environment.

We grew revenue 1 percent year-over-year, or 4 percent in local currency, and you need to look at these numbers a little differently this quarter. For the first time in a long time, the dollar was strengthening, so the currency conversion was actually a headwind for us. We also continued to show strong operating leverage with non-GAAP operating profit up 10 percent year-over-year. This was a solid performance, and I thank all of you for your efforts.

But really, Q1 was like a tale of two companies.

HP Services — as a result of EDS and TS — had a strong quarter, delivering virtually all of the local currency revenue growth and more operating profit than any other business. It’s gratifying, because this performance was possible because of the hard work we’ve been doing to restructure those businesses.

When you take HP services out of the mix, it’s a very different picture. PSG had revenue down 19%. ESS had revenue down 18%. IPG had revenue down 19%. In fairness, across IT and even other industries, product businesses are struggling in this economic climate. And we did gain share in key market segments. PSG and ESS gained roughly 1 and 3 points of share, respectively. In IPG, quite frankly, we still have work to do across a number of dimensions like inventory, both owned and channel inventory.

In an environment like this, there’s no margin for error and no tolerance for inaction. To give you a little insight into my world, after we report our earnings, we engage in a dialogue with analysts and investors. They’re going to ask what we’re doing in light of the current environment to right-size these businesses.

The math is pretty straight forward. From a productivity standpoint, you’re supposed to reduce headcount on par with declining revenue. If you believe the environment isn’t going to improve, you should take a bigger cut to get in front of the problems. You can do the calculation, as easy as I can. We have about 100,000 people in our product businesses, with revenue down roughly 20%, and an environment that may not get any better in 2009.

I’ll be asked by investors, “Where’s the job action, where are you taking out this roughly, 20,000 positions?” Well, I don’t want to do that. When I look at HP, I don’t see a structural problem of that magnitude. There are pockets where restructuring needs to happen, and areas where actions will be taken as part of our ongoing workforce optimization process. But at a company-wide level, I don’t believe a major workforce reduction is the best thing for HP at this time.

I think we are fundamentally sound, and when the economy picks up, I want HP to be strong, and to take share and to outgrow the market. I said it last quarter, my goal is to keep the muscle of this organization intact. But we do have to do something…because the numbers just don’t add up and we need to have the flexibility to make the right long-term investments for HP.

So we are going to take action. We have decided to further variablize our cost structure by reducing base pay and some benefits across HP. My base pay will be reduced by 20 percent. The base pay of Executive Council members will be reduced by 15 percent. The base pay of other executives will be reduced by 10 percent. The base pay of all other exempt employees will be reduced by 5 percent. For non-exempt employees, base pay will be reduced by two-and-a-half percent. Additional efficiencies, including changes to the US 401(K) plan and the share ownership plan, will also be implemented. Of course, the implementation of all of these actions is subject to compliance with local laws and regulations. Follow-up communications will detail the timing and the plans in your location.

This does not change our pay-for-performance strategy at HP. If we outperform, and there is a chance we will, then we will increase the total amount of variable pay. In fact, the financial flexibility we’re gaining helps put us in a better position to compete and to win in the marketplace, and fund the bonus program this year based on pre-adjusted salaries. If the company performs well, if our individual businesses perform well and if you perform well, then you could potentially make up the difference with your bonus. I can’t promise you anything, but I tell you…there is a chance…if we get this right.

To be clear, these actions don’t make up for all of the decline in revenues. We’re also benefiting from the tough actions we’ve taken over the last few years. People always asked, “Why are we so focused on getting costs out in good times?” Now…is why that work was so important. We’ve been able to bank some of those savings, and we’re making a withdrawal, which along with the actions we’re taking today, I hope, will get us through this recession.

Again, there are no guarantees. If the environment gets worse, if the downturn lasts longer than we’re assuming, if our performance declines, we’ll have to reassess. But for now I believe this is the right thing for the strength of HP.

I know this is a tough time. But if we get this right, HP can be the kind of company that not only has led, but will extend its leadership. We can emerge from this recession in a powerful position to create value for our customers, our shareholders and our people for years to come.

Thank you.

Mark

Lyra Symposium 2009 - The Death of Edgeline

Two years ago Edgeline was all you heard about.

HP had set their eyes on the copier world again and this time it was different.

This time HP has it's own machine, not some "duct taped" apparition.

This time HP was in charge of the channel, not partnering with a non-committal, old school dealer channel.

With Edgeline and an existing VAR channel, The Death of The Copier was just around the corner.

The machine utilized ink, did not use heat, corona wires, or static.

Demos were conducted, partners and service technicians trained.

Awards like the "Must See ‘em award" at the Graph Expo trade show, the “Technology Award” from the Microsoft Vendor Program (MSVP) and kudos from no less than BLI came rolling in.

Elite dealers made unit commitments - the world was their oyster.

The world waited -

And waited.

Fast forward to January, 2009. More specifically to the last session of the three day Lyra 2009 Symposium.

On stage sits the panel of esteemed financial pundits who specialize in analyzing the print industry. Keith Bachman, Managing Director and Senior Research Analyst Enterprise Hardware and Imaging BMO Capital Markets, Rob Sethre, CEO Woodford Group, Charles LeCompte, President Lyra Research, and Shannon Cross, Managing Director IT Hardware and Imaging Technology Cross Research.

Someone from the audience asks about HP Edgeline.

The panel does not hold back.

Phrases like,

"...the Edgeline has had no success at all..."

and proven to be an "objective failure" or HP is at best "...persistent at their failure..." seem to echo off the dark blue velvet back drop.

Of course, it didn't help that HP just announced the "relocation" of Edgeline R/D from Vancouver to Singapore. No, that did not help at all.

Edgeline falls within in IPG so the discussion blossoms once again with phrases like,

"...IPG is getting decimated..."

because "...Hurd is now focusing on IPG...trimming the fat..." so IPG can be "...more nimble..." especially when "...there is no more growth coming from the cash-cow..."

As bad as all this is, and deservedly so, there is a silver lining of sorts. It is expressed that no other firm in the world would be able to absorb such a disappointment. Additionally, it was commonly believed that HP will "do something" to get into and ultimately dominate the copier market.

As for suggestions on how HP could do just that - Shannon Cross in a wonderfully abrupt and direct manner clearly stated,

"HP should buy Canon."

She followed up with, "they should buy Xerox...but there would be dominance issues." I believe alluding to the monopolistic aspects of such an occurrence.

HP Should Buy Canon - that is the take away from this session.

An acquisition like this would allow HP to own outright, their laser engines and give them some sort of foothold in the copier industry. But, in light of the relative strength and dominance Ricoh will soon have in the industry, the question has to be, does HP have enough guts to get into the fray?

If only HP had a gutsy-type guy at the helm...

UPDATES:

The Death of the HP CM8060 with Edgeline Technology has been Greatly Exagerated

HP - $8.3 Billion in Earnings - E.P.S. up to $3.25 from $2.68

"Fiscal 2008 was a strong year with some notable accomplishments ... We have prepared HP to perform well and are building a company that can bring meaningful value to our customers and stockholders for the long term," Hurd wrote. "Looking ahead, it is important to separate 2008 from 2009, and acknowledge the difficult economic landscape."

The annual report revealed the following:

* Revenue growth of 13 percent, to $118.4 billion
* $8.3 billion in net earnings
* Earnings per share of $3.25, up from $2.68 in 2007

Additionally, Hurd earned $42.5 million in 2008, according to the company's proxy statement, released Tuesday.

HP Printers Sold in Iran - The Unholy Alliance -

"HP has a policy of complete compliance with all US export laws.", David Shane, a spokesman for the HP.

He would not say whether HP plans to stop sales of its printers in Iran.

In a story first broken by Farah Stockman, at the Boston Globe, and now breaking all over the internet, HP, through a third party distributor, Redington Gulf is reported to be selling printers in Iran.

Lot's of printers.

According to sources withing Iran, HP holds 41% of the printer market, this, in the face of a comprehensive embargo that prohibits HP from sending its products to Iran.

There is a good argument that selling consumer based goods may not tip over into a national security issue, but neither do cigars and rum.

Indeed, HP is not breaking any laws.

Products being supplied to Iran are not likely to be mentioned in a specific "ban" list and the third party distributor provides insulation from legal harm. Of course, if HP is sufficiently aware of Redington Gulf's sales in Iran, it may be in violation of US export laws.

Andrew DeSouza - US Treasury Department, said US companies are barred from selling their goods to a distributor if they have "knowledge or reason to know" that the goods are intended for Iran.

But what of the publicity damage? Xerox may provide answer.

After reviewing the Xerox website in February of 2006, SEC contacted Xerox, asking about the third-party distributors Xerox used to sell its copiers in Iran, Sudan, and Syria.

"We note from your website that you may have operations associated with Iran, Syria, and Sudan, which are identified as state sponsors of terrorism by the US State Department and subject to economic sanctions imposed," stated the letter from Cecilia D. Blye, chief of the SEC's Office of Global Security Risk. "We note also a public media report that Xerox products are sold in Iran."

Xerox said they had entered into legal distribution agreements with foreign distributors who were within their legal rights to sell in Iran.

By August, Xerox announced an end to the those distributor agreements.

HP is on the right side of the law on this. Whether Hurd acquiesces to the predictable media attention remains to been seen.

Sourced article, Boston Globe by Farah Stockman, here.

Click to email me.

HP Q4 ConCall with Hurd

Conference call on the 17th, with Hurd and Kathryn Huberty...highlights.

Summary - Fourth Quarter Highlights

Revenue totaled $33.6 billion, up 19% year-over-year or up 16% in constant currency from $28.3 million in 2007.

- The firm generated 68% of its total revenue from outside the United States, revenue in EMEA was up 22%, the Americas increased 17%, and Asia-Pacific increased 14%.

- Gross margin was 22.9%, down 180 basis points from 24.7% one year ago, driven primarily by the addition of EDS, which reduced gross margins by 140 basis points and, to a lesser extent, by a more normalized impact from commodity pricing compared with a year ago.
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- Imaging and Printing reported revenue of $7.5 billion, down 1% year-on-year as supplies revenue growth of 9% was offset by declines in Commercial and Consumer hardware revenue of 10% and 21% respectively.

- Operating margin increased 100 basis points to 15.5% as strong Supplies growth and cost reductions were partially offset by discounting.

- The firm gained share while total printer units were down 8% and Consumer and Commercial printer hardware units declined 8% and 9%, respectively.

- Revenue in HP Software grew 13% to $855 million and BTO outgrew its primarily competitors, increasing 15% from the prior year.

- Other software, which includes Open Call, Business Intelligence, and Information Management, grew 1% as the strength in the information management business was offset by declines in Open call.

- Software posted operating profit of $195 million or 22.8% of revenue.

- HP Services, with the addition of EDS, doubled its revenue to $8.6 billion and reported solid operating profit of $920 million or 10.6% of revenue.

- For the period between the August 26 acquisition date and October 31, EDS delivered revenue of $3.9 billion as customers across all regions continue to respond favorably to the combined services business.

- Demand remains solid, with a healthy mix of new and existing customers and integration plans are on track as the firm eliminated over 2,300 positions in connection with the EDS integration.

- HP Financial Services had revenue of $691 million, up 5% year-over-year, and generated operating margin of 7.4%.

- The firm continue to apply the same rigorous process for assessing the creditworthiness of its customers and the quality of its receivables.

Fiscal 2009 Outlook:

- The firm expects revenue of approximately $32 to $32.5 billion in the first quarter and approximately $127.5 to $130 billion for the full year.
- It plans to cut over $1 billion on a constant currency basis from the cost structure in 2009.

Brian Alexander (Raymond James): In IPG, what''s happening to the installed base in Consumer and Commercial hardware in light of the unit declines?

Mark V. Hurd:The installed base is staying installed longer. That''s clearly what''s going on and you can see us gaining share. We believe our installed base is sort of - depending on what country and what segment and what price category - we believe we''re doing quite well.

Certainly, you''re seeing a trend towards wireless in the home, which in some cases has fewer units doing just as much printing as the home used to, so for us, that''s not necessarily a bad answer. We sort of like the answer, where we can sell less hardware to effectively print as much as the ecosystem has been printing.

We have to be cautious here because when we get too aggressive on price, in many cases we''re accelerating the movement of our own installed base. The reason we put the installed base out there is to print. So for us, lower unit growth is not necessarily bad unless it means we''re losing share.

Catherine A. Lesjak: As long as people continue to print on HP printers so that we have a healthy installed base, having them hold on to their printers longer and delay upgrading is actually positive for earnings for us.

They are buying the same amount of supplies and we are not having to make that kind of next investment in terms of placing a hardware unit that’s either at a negative margin or at a very low margin.

The 10 most influential leaders in business technology in 2008

Last year he was "left off the list"...oh what a difference a year makes!

Jason Hiner, Editor in Chief over at TechRepublic, in his blog listed his Top 10 Leaders - it's an interesting read.

Number one with a "bullet" -

"1. Mark Hurd, Hewlett-Packard

Last year, I left Mark Hurd off the list and even remarked that Carly Fiorina deserved a lot of the credit for Hewlett-Packard’s resurgence because its roots are based in the HP-Compaq merger, which Fiorina had the guts to do. But, it becomes clearer every year that Hurd is making the right calls and motivating the various HP divisions to execute. HP is back on top in the PC market (having overtaken Dell), it is tied for the lead in servers with IBM, and it is even making strong moves in the networking market with its ProCurve gear. Plus, it bought EDS in 2008 to expand its footprint in IT services. All of the while, it has allowed its incumbent printer business to quietly take a back seat. That’s why HP is doing so well, even in the face of economic headwinds, and that’s why Hurd deserves the top spot on this list."

And I found this post over at MediaWireWeekly from February, 2007 - "...He barely makes appearances, not to make a statement, but because he is actually huddled with his management team working..."

Not bad, I doubt Hurd even cares which is cool too.

HP announced profits of $2.7 billion on sales of $33.6 billion

PALO ALTO, Calif., Nov 24, 2008 (BUSINESS WIRE) --

--Fiscal 2008 net revenue up 13%, or $14.1 billion, to $118.4 billion

--Fourth quarter GAAP operating profit up 4% to $2.7 billion; $0.84 earnings per share, up from $0.81 a year earlier

--Fourth quarter non-GAAP operating profit up 21% to $3.4 billion; $1.03 earnings per share, up from $0.86 a year earlier

--Fourth quarter cash flow from operations of $3.3 billion; fiscal 2008 cash flow from operations of $14.6 billion, up 52% from a year earlier

--Closed EDS acquisition; integration on track

HPQ 35.70, +1.06, +3.1%) today announced financial results for its fourth fiscal quarter ended Oct. 31, 2008, with net revenue of $33.6 billion, up 19% from a year earlier and up 16% when adjusted for the effects of currency. Excluding EDS revenue, net revenue grew 5% year over year or 2% when adjusted for the effects of currency.

Imaging and Printing Group

Imaging and Printing Group (IPG) revenue declined 1% to $7.5 billion. Supplies revenue grew 9%, while Commercial hardware revenue and Consumer hardware revenue declined 10% and 21%, respectively. Printer unit shipments decreased 8%, with Consumer printer hardware units down 8% and Commercial printer hardware units down 9%. Operating profit was $1.2 billion, or 15.5% of revenue, versus $1.1 billion, or 14.5% of revenue, in the prior-year period.

"HP capped off a strong year by delivering another solid quarter led by strength in our services segment and disciplined expense management," said Mark Hurd, HP chairman and chief executive officer. "Our global reach, broad portfolio, numerous cost initiatives and consistent execution differentiate HP in the current economic environment."

Five Reasons HP Is OutPerforming The Market

I grabbed this post off of the Blog over at Channel Web

BLOGS
The Channel Wire
November 18, 2008

Five Reasons HP Is OutPerforming The Market

With many technology companies posting disappointing results in the midst of the economic downturn, Hewlett-Packard Tuesday released an upbeat preliminary fourth-quarter forecast.

The world's largest supplier of IT products and services said its expects that revenue for the quarter ended Oct. 31 jumped 19 percent and earnings grew 4 percent. HP shares were up 10 percent or $2.96 to $32.31 in midday trading on the good news.

HP gave no details on specific product segments or geographies but said its revenue for the period ended Oct. 31 reached $33.6 billion, a 19 percent jump over year-earlier sales. For the year, net revenue was up 13 percent to $118.4 billion. The sales figures exclude the impact of HP's recent acquisition of EDS.

Here are five reasons HP is outperforming the market.

1. HP CEO Mark Hurd

He isn't infallible or the new Messiah, but he is pretty darn good. He's made a string of key acquisitions this year, capped off by EDS and LeftHand Networks. But his most important trait is that he's constantly visiting and listening to customers. And he keeps his closest counsel with his biggest customer: the channel. Hurd regularly makes one-on-one visits to solution providers both large and small. He asks questions. He listens. He motivates. No other CEO of a major technology company keeps as close to the channel as Hurd.

2. HP's Diverse Product Portfolio

From the desktop to the data center. From printers to routers. From network management to asset management software. HP products span the technology spectrum. At $118 billion, this is truly a one-stop shop. And now with its $13.9 billion acquisition of services giant EDS, HP has the people power and services muscle to do it all. Take note that even with the biggest and broadest portfolio in the business and a boatload of services people, HP embraces the channel. Bottom line: HP gets that it's a solutions game. And solutions means channel.

3. Committed Channel

HP has worked hard over the past several years to hone its channel strategy to focus on a mutually profitable relationship with solution providers. It hasn't always succeeded or delivered on its promises, but it's shown a willingness to fix things on the fly rather than letting channel problems fester. it is the biggest and yet it is the most channel-cognizant. One big reason is that Hurd views the channel as an extended sales force. He understands sales and he wants his partners out there in the front lines winning over new customers.

4. Maniacal Focus On Profitable Growth

No other company right now has a sharper focus on profitable growth than HP. Hurd is closing out his fourth year at the company and his drive and determination to do things more efficiently and profitably in everything HP does has resulted in a new and more inventive HP. That "profitable growth" mantra has everyone at HP working toward a common goal. It's a, 'Hit your number or hit the road,' proposition. That is a good thing, especially as we come into what looks like the worst economic downturn since the Great Depression. Look for HP to buck the trend and beat the bad news blues.

5. Full Speed Ahead With R & D

Based on his long list of acquisitions, some observers might think Hurd's R&D budget consists in snapping up smaller, innovative companies. Not so. HP has remained on top of the technology heap in part because of its willingness to invest in product innovation. The company's multibillion-dollar R&D effort and the company's cultural legacy of building better products is a huge differentiator. HP products are more often than not better engineered, designed and performing than the competitive product sets. Take Blades. "Blade everything" isn't just a marketing slogan at HP; it's a technology commitment.

---------- End Post ------

Points 1 and 3 resonate- Hurd and the Channel, great combo...

HP to cut 24,600 jobs worldwide

US technology giant Hewlett-Packard has said that it will cut 24,600 jobs worldwide...over the next 3 years...

Ok, I don't remember hearing HP say that the aquisition of EDS would mean "business as usual" like the RiKON announcement spawned.

Still, can we see the future of Ikon in this announcement from HP?

Hurd Speaks -

"HP has a strong track record of making acquisitions and integrating them to capture leading market positions,' said CEO Mark Hurd. 'HP now has the broadest technology capabilities in the market to meet customer needs today and in the future,' he added."

Who's The Boss?

I am always amused when "Sales Managers" push getting a proposal in front of the prospect as soon as possible.

It is my humble opinion that one should "earn the right to propose" before throwing numbers and "closing techniques" at a prospect. I feel it's amateurish at best and more likely unprofessional.

So I ask you - WHO IS YOUR BOSS?

Is it Mark Hurd? Is it Espe? Is it the stock holders of your company? Is it the owner of the dealership you currently work with? Is it Obama?

I say to you NO.

This is a personal opinion, and for all you "bosses" out there this is for you too.

Your "boss" is the most complicated person in the world, the most befuddling, and confusing and although you have known this person all your life, you probably don't know as much about he or she as you should.

The "boss" I refer to is the person who looks back at you each morning while you're shaving or putting that stuff on your eyelids - you.

You are your boss.

Now, I ain't no Tony Robbins, loved him in Shallow Hal, but this isn't that difficult of a concept to get...your current place in life is a direct result of all the decisions you have ever made prior to this point in history - not Obama's or Espe's.


This epiphany can be liberating - but does carry a heavy burden for you- now you need to take complete responsibility for your life, the good and the bad - YIKES!

It's like the Matrix - once you "get it", you may ask yourself, "why oh why didn't I take the Blue pill..."

Ignorance is truly bliss - If you want proof, ask your manager.

Click to email me.

Hurd to Be Available To Partners

Hewlett-Packard (NYSE:HPQ) is offering its partners the prospect of a date with Mark Hurd.

One of my customers met with Hurd a couple of months ago. The meeting went very well.

HP, to me, has never been known as a "supreme" marketer. Well, let's just say that their marketing is no equal to their engineering prowess. They are very good engineers and creators of product(unlike Dell).

Hurd's attitude seems to be, "get out there and sell...!" which is refreshing and exciting at the same time...

More from the article by Craig Zarley, ChannelWeb


6:54 PM EDT Thu. Aug. 21, 2008
Hewlett-Packard (NYSE:HPQ) is offering its partners the prospect of a date with Mark Hurd.

The company is now formalizing a process to set up face-to-face meetings between solution providers, their customers and top HP executives, including chairman and CEO Hurd.

The strategy underscores Hurd's push to use the channel to extend HP's reach into the midmarket using the channel as an extension of HP's sales force. What's more, Hurd seems bent on using himself and his top lieutenants to help the channel win more business for HP.

Called ExecConnect, the plan allows solution providers to log onto HP's Website and submit a request to meet with Hurd or members of his executive team, said Tom LaRocca, HP's vice president of partner development and programs. "We are giving a structure and a formalization to our executive engagement program," said LaRocca. "In the last 12 months Mark [Hurd] has met face to face with over 100 partners."...

...LaRocca noted that HP now has a person dedicated to setting up the logistics of meetings between Hurd or his executive staff, including heads of the companies three business units: Ann Livermore at Technology Solutions Group, Vyomesh Joshi at Imaging and Printing Group, and Todd Bradley at Personal Systems Group.

"We want to continue to put partners in front of our executives and we want to give them a way to come into this program," he said.

LaRocca said partners can log onto the HP partner portal and submit requests or get more information on setting up meetings with HP executives."

A Week In The Life of Managed Print Services

June 2008.

One thousand miles and so far, yet to go.

Day One Victorville, California

Pre-Proposal Meeting - To review an RFQ for a small (30) fleet of copiers. Imagine if you can, a room full of copier people, all of them competitors asking questions relating to an RFQ. I sat in the back of the room and bit my tongue so many times I still talk with a lisp.

I swear, the copier guys still don't get it - but unfortunately, I don't think the prospective client gets it either - so it could be a match made in heaven for someone other than me. No worries.

Day Two - Santa Barbara, California - Initial Client meeting and printer fleet survey -

Ok, this is the "eat your heart out" part.

The drive to this client takes me past the Rose Bowl - yeah, the one you see around New Year's Day when Michigan comes out here and loses. Seeing the stadium always kindles something inside me - I remember watching the Rose Bowl on TV in Michigan looking at the sun and the short sleeves and shots of the bright, warm beach. Then looking out my window at the cold, post-x-mas, snow. LOL!

And then I remember the drives into Detroit or Flint in February - these cold, delayed stress-inducing visions are scattered as the turn in the road reveals the shimmering sunlight dancing off the Pacific Ocean! (yeah, that the Pacific Ocean).

Up the PCH to talk about Managed Print Services. 

The meeting is with all the right people - C-Level, facilities, operations.

During the meeting, I was instructed to "just inventory the fleet, so I can get a handle on what we've got here". Simple.

Same Day - Onward to Diamond Bar

Stopped in to review an Edgeline install. The client is 'stuck in a lease for a Konica - the Konica has never performed to spec, and for the last few months, prints with a "pinkish hue". Unfortunately, most of the reports printed are customer-facing documents reflecting important and revenue-generating information.

The lease has around 20 months on it still and of course, there is no easy way out. So the client is taking the Edgeline and moving the Konica off to the side as a backup that will act as a reminder to never do business with a copier dealer again...delicious.

Day Three - Imperial/El Centro, California. Four miles from the Mexican border.

Driving past the Windmills - you've seen them on MI:3 and many other movies and to the 86. The highway winds through the desert next to the Salton Sea. Point of fact, the Salton Sea was formed by accident; I have never seen swimmers in or boats on the Salton Sea.

I am currently engaged in a study of approximately 30 machines. This is a Mini-Assessment - a partial look at a subset of 400 copiers and nearly 100 single-purpose laser units. At the first look, we may be able to save 10's of thousands of dollars the first month after initiating a program.

Day Four - 210-bed Hospital - Mini Assessment

Meeting with IT director to interview and survey two departments. We end up looking at 4-5 departments and discussing strategy - the appointment takes 3 hours. Interviews with nurses uncover volumes of issues some out of scope but influential on the overall possible Managed Print Services project.

Primary findings indicate an "over-exuberance of selling prowess" in the last copier salesperson's delivery. The current fleet is over spec'd and underutilized - and machines are just too big(physically).

Same Day - The Hurd Meeting
After spending time at a local Starbucks sending emails and making phone calls, I head out to Hollywood(yes, that Hollywood) to meet a colleague before he meets with Mark Hurd and one of my clients.

We decide to meet at the Beverly Hills Hotel(yes...the hotel that inspired the Eagles', Hotel California) in the bar, The Polo Lounge.

Point of Fact: The Beverly Hills Hotel was built before the city and the city was named after the hotel. The hotel is nestled in a residential area and is the heart of the city.

The Polo Lounge is world-famous - with celebs sipping Martini's almost daily. It's four o'clock in the afternoon - ordering a Martini I ask the bartender to "surprise me" - she delivers the best adult beverage I have had to date - I have no idea what is in it. Prior to walking in, I had never heard of the Polo Lounge - I am such a cad.

My colleague walks in and promptly orders water - oh 0h - I tell him, "don't feel uncomfortable with me drinking a Martini", he responds, "Please don't feel uncomfortable with me ordering water." we laugh and get down to business. We are reviewing the RFQ from our meeting four days ago.

Same Day – After 5

My client’s meeting with Hurd is concluded and as a special treat, one of my peers has invited a select group to accompany him and our client to the Magic Castle. I had heard of this establishment before – lots of magic, exclusive, club members only, great food, and libation.

But before we meet for dinner, my peer inflicts upon our small convoy “Mr. Toad’s Wild Ride” through the Hollywood hills (Bob Seger). Just when I think all is lost, we pull off into one of those “scenic” view spots. We scramble out, jog up a few steps, and BAM! The view is of the complete L.A. basin.

Starting on the left and rotating clock-wise we first see the Hollywood sign, then Madona’s old house,  Griffith Observatory recently seen in Transformers, the L.A. skyline dominated by The US Bank Tower they blew up in Independence Day, the Capitol Records building that was destroyed by tornadoes in The Day After and over to Century City and Santa Monica the areas destroyed in the movie Volcano.

And now - to the Castle. The dinner was great, the entertainment was world-class and business was discussed – a good time was had by all.

and with that...another week in the life fades to black...Ho Hum…

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What Is Going On Over At HP?

First saw this on Jim Lyon's blog.

Stirrings at HP IPG -

Started here.

Looks like simple consolidation of some redundant areas - but HP did use the words "significant" and "cost cutting measures".

From the IdahoStatesman -

"...HP Spokesman Ryan Donovan said the restructuring will “impact” Boise, but would not say whether layoffs are in the offing. He said the reorganization will take effect Aug. 1...

The Imaging and Printing Group has traditionally been HP’s most profitable, largely because all of the money that the division makes from selling printer ink.

In the first six months of HP’s current fiscal year, the division earned $2.38 billion on revenue of $14.9 billion. But the operating profit improved only 6 percent compared to last year, a pace lagging other HP divisions Hurd has already reorganized.

Donovan said the restructuring will move HP from strictly a printer company to global provider of hardware, software and printer services.

The three new business units will:

• Specialize in offering Ink jet hardware, supplies and services to individual consumer and small businesses.

• Offer printers, supplies, management software and counseling services to large corporate customers.

• Provide large graphic printing products, supplies and services for everything from architectural blueprints to outdoor signs."

HP to acquire EDS for $13.9 billion

That's FOURTEEN BILLION...

HP said the deal, which has been unanimously approved by the HP and EDS boards of directors, will close in the second half of the year. HP expects that the addition of EDS will more than double HP's services revenue of $16.6 billion in fiscal 2007. At the end of 2007, HP and EDS had a collective services revenue of more than $38 billion and 210,000 employees, doing business in more than 80 countries, HP said.

Well, this certainly illustrates the level of HP's commitment to market domination

I found this statement by Peter Cohan, "...I think HP's most profitable business, printers, might be able to make better use of the $12.8 billion in capital. This Imaging and Printing Group earned a 13% estimated net margin. It grew a mere 4% to $7.3 billion in revenue and given that this unit is by far the most profitable in HP's stable of businesses, this would appear to be the best place to invest for future growth.

Now may be a good time to sell HP stock. Mark Hurd came into HP as a nuts-and-bolts operator. This deal suggests that Hurd has run out of growth options and that HP can't grow earnings through more cost cuts. I have no doubt that Hurd could cut costs once EDS has been integrated..."

This follows what Hurd said back in March, ""We are shifting our portfolio to drive growth and are aligning our portfolio to margin rich opportunities for investors," he said. "We continue to look for opportunity [for higher gross margins] in software and in services."

What does this mean for IPG, if anything? I don't know yet, but IKON sure as heck would not cost FOURTEEN BILLION dollars...

Should HP Purchase IKON's PS Division? - Delicious!!

"At the beginning of the month we sell solutions (Documentum, Captaris, RightFax, Objectif Lune, etc.) by the end of the month, we sell copiers (Ricoh, Canon, K-I-Coe-Sera)" - famous IKON sales-dude.

Recent press:

"...In a conference call, Espe noted that IKON planned to work with vendors, adjust its go-to-market strategy and take steps to improve sales profitability. To that end, IKON is expected to reduce costs and expenses by $25 million in this fiscal year. Espe noted that the company does remain committed to a stock repurchase plan it embarked on in November 2007.

The bright spot in the report was in managed and professional services, which reported revenue growth of seven percent, to $206 million from $192 million in the same period last year.

Within that realm, on-site managed services, which comprises some two-thirds of IKON's managed and professional services revenue, grew 10 percent. The company noted that was largely due to the expansion of existing contracts and new sites. Professional services grew nine percent, owing much of that increase to strong European business. However, off-site managed services decreased three percent..."

The PS Division is doing better at IKON - as equipment sales stall, flatten and degrade.

How many monkeys does it take to...

How many people does it take to process, configure and deliver a copier? Would you believe 20-30, if all is well with the order and nothing is out of the ordinary? Of course these 20 or so people are just involved with the "pushing of paper" - add to this the technicians who stage equipment, the drivers who deliver and the techs and Professional Service Consultants who connect the unit to the clients' network.

Now, to make things really interesting, lets shift some of the higher end tasks like network connectivity, scan connectivity and set up, and user set-up LDAP or Exchange, onto the technicians plate - technicians who are the very best at fixing mechanical breakdowns and failures; twisting wrenches and banging hammers. -- Train Wreck

Honestly, selling the copier is the easiest aspect of sales at IKON.(at first)

I am not making any of this up, this stuff can't be made up, I have seen it with my own eyes.

"OH, how the Mighty have Fallen"

Get this - A year ago IKN's stock was at 14.00 today it is at 7.14! Can you say, "DANKA"?!!

So now IKN is in the middle of a huge stock buyback, "reaching out to vendors" and looking to reduce more costs - while doubling or tripling the layers of management between the "trenches" and the "Towers" - classic!

Core Competencies

When the going gets tough, get back to basics, back to the roots, back to what worked and what got you to over 2 billion in revenues - copiers. Sell Copiers. Period. No EDM, no Documentum, no Captaris, strictly copiers. The Core. Reduce the number of people it takes to process an order and deliver a product. Get comfortable residing in a cell, on CPM's Vendor Analysis Spreadsheet. Get use to disappointment.

And in order to re-focus, get rid of the influences that can take you away from your focus - Professional Services.

What would HP get in the end?

1. A global network of established relationships built around solutions.

2. An instant increase in "brainshare" in the Analysis and application space of Managed Print Services.

3. Payback. See this previous post.

Off the IKON site:

"IKON's Value Proposition

At IKON, partnering with our customers to uncover needs, costs, current processes and future expectations is a critical part of developing a strategy that will be successful for years to come.

What sets IKON apart from the competition is our unique ability to provide the most knowledgeable people and integrate them with innovative technology, document expertise and best practices to create a framework for success. From this base of experience, we deliver a sustainable competitive advantage to your operation by eliminating inefficiencies and improving your administrative and document management processes."

I don't care how low their stock is, the above Value Prop is very impressive - not one mention of copiers, not one. Now, just replace "IKON" with "Hewlett-Packard"(or SIGMAnet - MPS... who?). It works, don't it?

Ok, I have both Hurd and Espe's email; I volunteer to broker the deal. For a small fee.

Introductions might go like this:

"Mark, meet Matt. Matt, this is Mark. Now, we're just three guys talkin here - no worries, ok? Yousse, guys work somin out, bada bing, bada boom - we got a big deal, we toast, we dance, we sing, we all go home happy, capice? Talk amongst yourselves - fogeda bout it.

Loyalties...

HP is looking for a few good VARs and continued Loyalty from their existing VARs. The challenge seems to be converting resellers with IT Service mentality into a “copier-type” mentality. Additionally, converting “copier-centric” resellers into HP minded, analytical partners, is a severe mind-shift.

In this space, HP has become all too familiar to forwarding leads to the “copier” guys and having the lead mysteriously converted into a Canon or Ricoh sale – or even worse, standing with a reseller in a Managed Print Service deal and watching the supplies orders dwindle to nothing as the reseller converts their customer from OEM supplies to third party.

Supplies – the “Holy of Holies” for HP is the Untouchable Goose – and HP needs those Golden Eggs to keep dropping.

And as much as this is an economical, sales and marketing issue it all seems to boil down to loyalty with HP. A bit naive? Yes and reality.

Quote:

"We need quality partners," Hurd said. "If we have partners that can't get it done, I don't want them helping us. I don't need bad partners. I need good ones. I need great ones. I need ones that will help us slay some dragons. I want some that can go help us compete. I want some that are willing to put skin in the game and willing to be just as consistent, just as simple, just as excited, just as fired up as we are. And if they're not, they should go partner with 'insert name here,' some of our competitors, and mess them up.

"And if all they want to do is whine about channel compensation, and they want to do the same thing they did 10 years ago and get paid more for it, go find some other place to partner with," Hurd continued. "If you want to get on the cutting edge and kick some butt and go get something done, then come hang around with us."

If you're a channel partner with anyone, even HP, read that again - do you feel the tone? This guy turned HP around in 3 years. He has the legitimacy to say this, to mean this and to not care what people think about it.

APC- Vegas

Hurd also said regarding the Americas Partner Conference:

"I didn't want to miss this because you are so important to us," said Hurd, who spoke in a hoarse voice. "You are an extension of Hewlett Packard. Being here is a big deal to me and I want to make sure you knew that."

We were there. We believe we are an extension and loyalty goes both ways.