Hewlett Packard 4Q13 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

PC market contraction is slowing

“Overall the PC market contraction is slowing and we see signs of stabilization particularly in the commercial segment.”

Employees still need a PC too

“I do think there’s also some net momentum in the long overdue PC refresh, and what I think commercial customers are understanding from their employees is well employees may want a tablet. They actually also need more traditional compute devices to do their real work in the everyday environment in their company, so that is helpful.”

Businesses trying to figure out what they want to do with public/private cloud still

“There is movement around which are they going to make a bet on HP’s hybrid cloud or they are going to make a bet on someone else’s cloud, so there is a battle going on for architectural control in the enterprise and we feel good about where we are in that.”

Still early stages companies looking for proof of concept

“It’s early stages, there are still a lot of proof-of-concepts, there are still a lot of trying to decide what workloads people want to move to the cloud, what kind of cloud they want to move those workloads to’

HP’s customers seem to be asking for a hybrid cloud

“This hybrid cloud offering that we crafted well over a-year-and-half ago, it’s the right answer. I can tell you every single day customers say that is exactly what I want.”

What people are looking for in Big Data

“everyone’s looking for a Big Data analytics platform that is based on the Hadoop, that can combine structured data plus unstructured data with enterprise grade security, with the ability for them to write apps, us to write apps and the ecosystem to write apps”

Businesses really value stability, change-over from IBM to Lenovo for x86 business could be difficult

“Lenovo announced they are buying IBM’S x86 server business from top to bottom and good news is that those create an opportunity for us because what I have learned about this business is instability and questions about the future make it very difficult because people want to bet on a roadmap and they are worried that as a change of ownership occurs, is the roadmap the same, is the investments the same, is the market to be the same, is the service going to be the same?”

Hewlett Packard 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“parts of the business like printing, enterprise services, converge storage and software are making progress, while others like industry standard servers and personal systems have not completely turned the corner.”

“We also have got to simplify and make more effective our selling motion. ”

“I actually I’m quite confident in our technology, I’m confident in our next-generation blades, in Moonshot.”

“Enterprise Group’s performance, especially during the last quarter. I would say that weak execution has amplified the market challenges that we know exist and it’s been a very aggressive pricing environment.”

“The server market growth rates have come down in the last quarter. The PC market has not stabilized as much as I had anticipated it would. That stabilization is yet to occur. Then finally, Enterprise Services, which is good for this year is, the revenues running off more slowly this year, which is good for this year but creates growth challenges for next year”

“There are some segments that will absolutely grow next year and we will deliver very good performance, but I think it is unlikely given the changes that have occurred over the last quarter or so that we are going to see growth in 2014 as I had hoped.”

“One of the things that we are absolutely seeing in Technology Services is the need to really improve our attach rate on some of our newer products. So, as some of the older products like Business Critical Systems, which has very strong attach and penetration rate as that has a long tail, but it is coming down and hardware in general has been coming down. That’s starting to impact technology services, so what we are doing about that is trying to improve our attach in the newer products and then also coming out with new innovative service offerings like what we call Proactive Care or what we call Datacenter Care, kind of coming out with these new offerings to somewhat cushion the pressure that we are seeing, because hardware sales are declining.”

“The Server business has been under pressure for some time. The pricing in the marketplace is as intense as I have seen it since I have been at HP, but the revenue share loss this quarter was bigger than we had anticipated.”

“Then we must see networking grow faster”

“Then frankly, our Storage business, the converged storage part is going well, but the decline in tape and other areas of XP, we can do better than that.”

“go-to-market is more than just a coverage model. It is our ability to price. It is our ability to provide the specialist and a solution architect that are needed to sell. It is about our ability to provide compelling bundles of server and storage, like an appliance for some of our software elements.”

“China is softer than we had anticipated and it is actually across the board. We are seeing more rapid growth in Tier-4 through Tier-6 cities, a little less in the big areas, but it is reasonably soft demand across the board at least as we see it.”

“You also have to remember this company was the product of the many acquisitions going all the way back to Compaq, EDS, Arcsight, TippingPoint, Fortify, Opsware, you name it. While there were many acquisitions that I think were integrated well, not all of them were fully integrated in such a way that we had the right ERP systems, et cetera. “

Hewlett Packard at Bernstein Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“at our core, we are an engineering company. That engineering expertise commitment to great products, great software, great services is very much part of the HP DNA”

“the second great strength of this company, to the passion for customers and customer support we will do anything for customers, sometimes at great cost.’

“the challenges that we face are clear…we face these huge tectonic plate shift in terms of IT, how technology is bought, how it’s sold, how it’s paid for, how end users relate to that technology, how software is sold and serviced”

“I think that the financial crisis of 2008 fundamentally resets not only consumer spending, but also business spending on categories like IT. And if you look at like financial institutions their compliance costs have gone up dramatically and that money has to come from some place. And we see businesses of all sizes fundamentally having reset how much they are willing to spend and I think that is a function of the financial crisis and sort of a confidence around are we really out of the woods yet.”

“in the technology business there are very quite predictable life cycles of products. And in the CEO transition, I think we left some of these products go too long on the downside before we had the next generation of those products.”

“say what you will about my predecessors, they assembled a set of assets here that just happens to be perfect for what I call the new style of IT.”

“we have to demonstrate that across cloud, across security, across big data and frankly across mobility and then each of our businesses needs to perform up to their full potential.”

” this company is not — was not a well instrumented company. I thought I would come in with almost like a traders dashboard at my desk saying okay server market share in plans greed, you know storage market share in Asia, whatever it was, there was none of this data in the way that you could absorb it that you could measure people on, there was not a consistent scoreboard of data across business units, there was not a consistent customer loyalty metric.”

“enterprise printing is not shrinking as you look around the globe and part of that is because so many enterprises in emerging countries are actually growing their printing even though in the U.S it maybe flat to slightly declining.”

“my view is that the low end is growing very rapidly, whether it’s low end PCs in Brazil or 1P servers here in United States and we have got to not over engineer our products, but have the best quality and the best features for a given price.”