Special Coverage Series

Network Computing

Special Coverage Series

Commentary

Kurt Marko
Kurt Marko Contributing Editor

HP's Turnaround: It's Time To Believe

Not only does CEO Meg Whitman seem to have a solid strategy, but there's plenty of evidence it's starting to work. Maybe it's time for skeptics like me to admit we're wrong.

The last few years for HP have been some of the most tumultuous for any major corporation in recent memory not named Enron. HP's era of strife includes six CEOs in the last 12 years, several five-figure layoffs during the same period, multibillion-dollar write-downs and a stock price that dropped to fire sale levels last November. It was easy--nay, natural--to assume the company would follow the path of its acquired properties--DEC, Compaq and 3Com--and be sold outright or broken up for parts.

But it turns out last November's confluence of bad news--an underperforming earnings report and the accompanying massive $8.8 billion write-down on the value of its ill-advised Autonomy acquisition--was the nadir of HP's fortunes. The company has since slowly but surely been grinding away at CEO Meg Whitman's five-year HP turnaround strategy to produce what she characterizes as HP's strongest product lineup in 20 years.

More Insights

Webcasts

More >>

White Papers

More >>

Reports

More >>

It's become clear that Whitman's plan wasn't just a stall tactic to bulk up her bank account. Unlike her predecessor, Leo Apotheker, who was tickled to finally get a job running a tech giant like HP, Whitman didn't need the money nor the headaches of righting a sinking ship like HP. She was already a billionaire from her days at eBay and had nothing left to prove. But she was on HP's board, and thus bore some responsibility for the mess left by Apotheker and his predecessor Mark Hurd's short-term, quarterly numbers focus and scandalous exit. Whitman had been around Silicon Valley long enough to venerate HP's traditions and reputation, and clearly didn't want to see it end like this. Unlike certain recent holders of her position, she valued HP as an institution capable of producing great products that improved the lives and profitability of its customers, not just as a path to fame, fortune and power.

The cynics among us--particularly old HP hats like me (full disclosure: I worked at HP for over 17 years, leaving more than seven years ago) who remember the days of Bill, Dave and their protégés like John Young--took Whitman's early pronouncements as so much lip service. We'd been burned by former CEO Carly Fiorini's rechristening of the HP brand as "Invent," only to see it end up as a hollow slogan and not a recommitment to product and engineering excellence. But Whitman has since had time to prove the skeptics wrong.

Last year was the painful part of her five-year strategy. In retrospect, it's clear Whitman's year-one tactic was to clean up HP's messy balance sheet and cost structure, including taking a realistic assessment of recent acquisitions, which resulted in the painful Autonomy and EDS write-downs. Another dose of pain was initiating almost 30,000 layoffs from an employee base that had bloated to nearly 400,000 after so many large buyouts.

This year starts the gain from all that pain. From a balance sheet characterized as "a mess" by one analyst who valued the company at a negative$2 per share last fall, HP has roared back. The result is an HP that saw its cash from operations increase 44% to $3.6 billion in its second quarter of 2013 while reducing its debt almost 40%. While cleaning up the finances to make Wall Street happy, Whitman was simultaneously repositioning HP to take advantage of the tumultuous changes upsetting the consumer and enterprise technology markets.

Indeed, as HP board member, noted venture capitalist and Internet luminary Marc Andreessen recently told CNBC, Whitman "has been emphasizing products much more, like Moonshot. She has more stuff out of the labs, more products under development. I think HP has more new products under development than it has at any point in its history." He even called Whitman HP's best CEO since the founders.

Next Page: HP's Transformation

 1 | 2  | Next Page »


Related Reading



Network Computing encourages readers to engage in spirited, healthy debate, including taking us to task. However, Network Computing moderates all comments posted to our site, and reserves the right to modify or remove any content that it determines to be derogatory, offensive, inflammatory, vulgar, irrelevant/off-topic, racist or obvious marketing/SPAM. Network Computing further reserves the right to disable the profile of any commenter participating in said activities.

 
Disqus Tips To upload an avatar photo, first complete your Disqus profile. | Please read our commenting policy.
 

Editor's Choice

Research: 2014 State of Server Technology

Research: 2014 State of Server Technology

Buying power and influence are rapidly shifting to service providers. Where does that leave enterprise IT? Not at the cutting edge, thatís for sure: Only 19% are increasing both the number and capability of servers, budgets are level or down for 60% and just 12% are using new micro technology.
Get full survey results now! »

Vendor Turf Wars

Vendor Turf Wars

The enterprise tech market used to be an orderly place, where vendors had clearly defined markets. No more. Driven both by increasing complexity and Wall Street demands for growth, big vendors are duking it out for primacy -- and refusing to work together for IT's benefit. Must we now pick a side, or is neutrality an option?
Get the Digital Issue »

WEBCAST: Software Defined Networking (SDN) First Steps

WEBCAST: Software Defined Networking (SDN) First Steps


Software defined networking encompasses several emerging technologies that bring programmable interfaces to data center networks and promise to make networks more observable and automated, as well as better suited to the specific needs of large virtualized data centers. Attend this webcast to learn the overall concept of SDN and its benefits, describe the different conceptual approaches to SDN, and examine the various technologies, both proprietary and open source, that are emerging.
Register Today »

Related Content

From Our Sponsor

How Data Center Infrastructure Management Software Improves Planning and Cuts Operational Cost

How Data Center Infrastructure Management Software Improves Planning and Cuts Operational Cost

Business executives are challenging their IT staffs to convert data centers from cost centers into producers of business value. Data centers can make a significant impact to the bottom line by enabling the business to respond more quickly to market demands. This paper demonstrates, through a series of examples, how data center infrastructure management software tools can simplify operational processes, cut costs, and speed up information delivery.

Impact of Hot and Cold Aisle Containment on Data Center Temperature and Efficiency

Impact of Hot and Cold Aisle Containment on Data Center Temperature and Efficiency

Both hot-air and cold-air containment can improve the predictability and efficiency of traditional data center cooling systems. While both approaches minimize the mixing of hot and cold air, there are practical differences in implementation and operation that have significant consequences on work environment conditions, PUE, and economizer mode hours. The choice of hot-aisle containment over cold-aisle containment can save 43% in annual cooling system energy cost, corresponding to a 15% reduction in annualized PUE. This paper examines both methodologies and highlights the reasons why hot-aisle containment emerges as the preferred best practice for new data centers.

Monitoring Physical Threats in the Data Center

Monitoring Physical Threats in the Data Center

Traditional methodologies for monitoring the data center environment are no longer sufficient. With technologies such as blade servers driving up cooling demands and regulations such as Sarbanes-Oxley driving up data security requirements, the physical environment in the data center must be watched more closely. While well understood protocols exist for monitoring physical devices such as UPS systems, computer room air conditioners, and fire suppression systems, there is a class of distributed monitoring points that is often ignored. This paper describes this class of threats, suggests approaches to deploying monitoring devices, and provides best practices in leveraging the collected data to reduce downtime.

Cooling Strategies for Ultra-High Density Racks and Blade Servers

Cooling Strategies for Ultra-High Density Racks and Blade Servers

Rack power of 10 kW per rack or more can result from the deployment of high density information technology equipment such as blade servers. This creates difficult cooling challenges in a data center environment where the industry average rack power consumption is under 2 kW. Five strategies for deploying ultra-high power racks are described, covering practical solutions for both new and existing data centers.

Power and Cooling Capacity Management for Data Centers

Power and Cooling Capacity Management for Data Centers

High density IT equipment stresses the power density capability of modern data centers. Installation and unmanaged proliferation of this equipment can lead to unexpected problems with power and cooling infrastructure including overheating, overloads, and loss of redundancy. The ability to measure and predict power and cooling capability at the rack enclosure level is required to ensure predictable performance and optimize use of the physical infrastructure resource. This paper describes the principles for achieving power and cooling capacity management.