(Update of Volume 8, Issue 11)
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HP's weak quarter pulls down Dow
HP's financial news drove down the Dow on Aug. 20, little
more than a week after the company had introduced more than 150 new
consumer products and gathered its faithful at the feet of CEO Carly
Fiorina in Atlanta. One day after the company had posted a 52-week
high stock price, HP released a third quarter report that had little
good news, more bad, and even some worse as it peered into its near
Despite posting a profit of $287 million for its sales period
ending July 31, HP's news spurred millions of shares downward more
than 10 percent the day after the report. In a remarkable day for the
company's stock, HP shares made up more than 4 percent of all
transactions on the New York exchange, with 51.2 million shares
selling down in less than 7 hours. HP's normal volume is about 11
million shares a day, but on Aug. 20 the company led the NYSE's most
actives by a 2:1 margin over Lucent. Those Lucent shares traded at
one-tenth of HP's share price. More than $1 billion in HP market
capitalization changed hands for the day, and HP shares lost $100
million in value. The next day brought no rebound, either.
CEO Fiorina admitted that the company should have done better
in a period where its only operating profits came from support,
services and the company's bulwark printing and imaging group. The
printer business accounted for 86 percent of the companys
operating profits for the third quarter. HP's enterprise systems
business continued to post red ink, but HP's biggest misstep of the
period looked to be trying to compete with Dell on PC pricing. HP
announced it was raising PC server prices to make its PC unit
profitable once again. Dell immediately countered this week with a
notice that it will lower its PC prices.
Analysts said HP showed revenue growth over last year's third
quarter only because of the weakness of the US dollar. HP Services --
the company's support arm that will offer almost all of the
opportunity for 3000 sites to spend money with the company next year
-- showed a $337 million profit for the period. But the red ink at
Enterprise Systems, which makes the HP-UX and NT servers which HP
wants customers to buy to replace their 3000s, widened from $7
million to $70 million. HP also took another $376 million in
restructuring charges and $141 million charge to amortizing goodwill,
so the profit for the period totaled out at $287 million.
Despite the sour news, Fiorina predicted that all HP units
will be profitable in 90 days, when the company reports its fiscal
2003 totals. The worse news came in the company's response to the
poor showing, as well as its forecast for its future. In addition to
raising PC prices, the company's response included a new round of
layoffs; 1,600 more employees will be cut. HP doesn't see an upturn
coming for IT spending, and it predicted it will miss analysts'
forecasts for its next round of revenues and profits, too. Dell,
which Fiorina derided in a recent Fortune.com article as "only a
distributor," reported $621 million in profits one week earlier,
more than twice HP's earnings. The competitor against the Compaq-HP
PC line showed more than $1.3 billion in sales growth over its
year-earlier quarter. Analysts estimate that Dell's overhead to make
and sell PCs is less than half of HP's overhead. HP can't adjust
prices on its PC lineup as quickly as Dell, either, because it sells
about 80 percent of PCs through dealers and retailers.
Not all layoffs are at HP
HP has given thousands of its employees the gate since its
merger with Compaq, but its biggest competitor executed layoffs as
well. IBM gave more than 14,000 of its services employees pink slips
as of June 30, and plans to lay off 600 more employees from a
microelectronics unit that already furloughed 1,400 people earlier
The layoffs were revealed in an SEC filing that also reported
on the final price for IBM's acquisition of PricewaterhouseCoopers.
HP tried to buy PwC in the fall of 2000, but had its board of
directors kill the deal when HP's stock value didnt measure up
as expected. IBM paid just under $4 billion for the consulting
business -- an operation that HP tried to buy before it moved on to
acquire Compaq's services force and the merger which that deal
HP World shows far fewer MPE
Although Interex's executive director said that 571 HP World
attendees came from the HP 3000 camp, news from the exhibitor and
volunteer community indicated a conference with MPE numbers well
below prior meetings. Ron Evans told OpenMPE listserver members on
Aug. 20 that more than 8,400 people attended last week's show in
Atlanta, including about 800 HP employees involved in sales
Both the user group's chief executive, as well as board
member Denys Beauchemin, were quick to defend the show's attendance
numbers, figures which have been unaudited throughout the 29 years of
Interex history. Exhibitors and volunteers pointed out in Internet
postings that the grand totals don't reveal all the story about who
made the trip to Atlanta for the first combined conference between
the Compaq/Digital user group Encompass and Interex, with HP as the
third partner in the show.
The user group presented its Hall of Fame Award to long-time
volunteer Jerry Fochtman, who headed up the MPE content track for the
conference for the third straight year. Board president Barry Breig
said the award went to Fochtman for a career full of service to the
user group, from chairing the SIG-IMAGE group to being instrumental
in launching the first All-Texas user group meeting in 1990.
Fochtman weighed in on the attendance perception after the
conference. When a string of messages surfaced on the 3000-L mailing
list about Interex's post-show survey, one attendee asked if only
5,000 had appeared in Atlanta. Fochtman said in reply, "I
understood the number to be over 8,000. However, from my perspective
this year is the lowest turn-out of MPE'ers I've ever witnessed in
One vendor who serves the 3000 community said from their
booth on the show floor's front row that they'd gathered 170 customer
leads on the first day, but saw contacts dip to 76 on the second day.
Session rooms for MPE-focused events always had fewer than 50 members
present, and often fewer than 20, a fact easily confirmed by the
slick new attendance system installed outside each room.
Interexs Evans said the group will switch back to its own
registration system for next years show, since attendance
breakdowns were still unavailable to Interex more than a week after
the show closed.
HP 3000 business manager Dave Wilde's kickoff talk was the
most populated session we attended. There may have been a possibility
to see more MPE faces at once in a reception later that evening, but
that event was cancelled after HP pulled out. Hoping to cut travel
costs in the tough IT economy, many people were trying to leave on
Thursday evening, when the Interex party took place. The show floor
was full of hungry attendees Wednesday night, when exhibitors hosted
tables full of pizza, hot dogs, chicken and free beer.
One MPE exhibitor wanted more detail on who was at HP World,
hoping to discover how much of the crowd was users rather than HP
staff, speakers and prospects. HP World attendance, Birket Foster
noted, is made up of many different parts. "It would be
useful," he said in a posting to OpenMPE's list, "to see
the number of attendees broken out in categories of:
1) End-users who paid for the privilege of attending
2) The speakers who were granted attendee badges for giving a
3) Vendors' personnel (excluding HP - the biggest Vendor)
4) HP personnel (we know this was a big training event for
800 HP System Architects who were teaching both end users and the HP
folks on the latest from "palmtops to Non-Stops")
5) Exhibit passes issued
Some SIG leaders at the show speculated that the light
turnout might have reflected on the fact that customers have heard
enough about migration from vendors of such services, and dont
have budget to execute right away. HP Worlds content managers
explained in July that some 3000 papers were not accepted because the
user group believed fewer homesteading customers would attend than
migrating users. But the groups Evans said Interex doesnt
have any favored destination for its MPE members and attendees.
We have no agenda in terms of pushing homesteading or
migration as the best alternative, Evans said. In fact,
in trying to reach out to more members in need of exploring the
options we funded a second e3000 Solutions Symposium event [this
spring] on the East Coast, even though there was a small turnout and
it was a financially draining effort. In contrast, HP World,
was an overwhelming success, bigger than last year's event.
Interex will continue to run this event for its membership next
August in Chicago.
Will 6.5 live even longer?
If the MPE community found its numbers reduced at the HP
World conference, the meeting still carried its share of news and
controversy for the 3000 customer. Early in the week HP announced it
is considering an extension to the support life for MPE/iX 6.5. HP
based its proposed extension nobody knows how much longer HP
might want to support 6.5 on the fact that half of the
3000s customer base is running on 6.5 and older releases.
HPs 3000 R&D manager Ross McDonald offered that fact in a
meeting of software vendors, but almost immediately the vendors
voiced concern over the support extension. Representatives from
Cognos and ERP app provider Exegesys said such an extension would
send the wrong message to the 3000 customers -- making the users feel
like HP will give them longer to exit the platform.
how about just buying PA-RISC chips?
Customers at HP World heard the first hard proposal for an
emulator project to extend the life of the systems PA-RISC
hardware, when Strobe Data owner Willard West announced he wants his
company to be the first to market with a product that emulates the HP
3000 systems. Strobe, which makes emulation products for Data
General, DEC PDP-11 and HP 1000 computers, plans to buy PA-RISC
processors from HP to create a hardware card that customers can plug
West said hes in an NDA standoff at the moment with HP
over the deal, since Strobe is requiring HP to sign an NDA before it
can discuss the details of the design of the product and of
course HP wants an NDA, too. He expects to resolve the standoff,
since Strobe has already established a working relationship with HP
for its HP 1000 products. West said the best long-term product for HP
3000 hardware emulation would be software-based, but apparently wants
to enter the market with a hardware-based product.
Swap that software until Oct. 2
One of the great traditions of Interex and its annual user
shows lives on this month, as the user group continues its
Contributed Software Library Swap Tape project. Information for the
tape, a collection of user-written programs for the HP 3000, is
available at www.interex.org/cslform.html.
You dont have to belong to Interex to participate, and
you dont even have to attend HP World to get in on the project.
Just submit program contributions by Oct. 2. Contributors get a copy
of the tape, with three years worth of programs on it, as well
as an Interex Value Membership or a $25 Amazon.com gift