Whitman deletes another chapter in HP history as CSC and ES borg

HP CEO meg whitman

Hewlett Packard CEO Meg Whitman Corporation bust another legacy left to it by a predecessor as he says goodbye to the company’s services.

The first lady of Palo Alto has already been closed chapter opened by the CEO, Carly Fiorina who once had signed the purchase of Compaq, only for the PC business HP being expelled with printers in November last the creation of HP Inc.

Now the EDS sip of former Playboy executive Mark Hurd, who left in 2010, is being removed. Some viewers think Whitman made the right choice, although having much HP as a manufacturer of tin infrastructure technologies.

Enterprise Services has a “millstone around the company’s neck,” said the head of Canalys analyst Alastair Edwards. “The purchase was a mistake, a misreading of where the market is headed.”

It certainly seemed again in 2008, when HP paid $ 13.9 billion for EDS – which later note the value of the company for $ 8 billion in summer 2012.

Edwards said the former HP was trying to emulate IBM, who built impressive professional services outsourcing and business – areas that are now causing pain Big Blue.

The writing was on the wall when the credit crisis is over – large company wanted fewer contracts outsourcing mega, and we opt for managed service offerings bites in the short term, he said. There were some exceptions to the rule – Deutsche Bank and TNT in mind.

“Finished lower growth HPE [services] business division to lose more flexible competitors,” said Edwards.

ES suffered embarrassing contraction in sales and profits, forcing Whitman to embark on four years of cost cutting, including layoffs and programs to restrict travel, overtime, etc. Morale dropped from affected computers.

The upper and lower lines have been in recovery mode for the ES in the last twelve months, it is perhaps surprising HPE will not realize some of the benefits of cost reduction that the service activity meets with CSC, a company also faces enormous pressure in recent years and has acquired bits of autonomy of the organization into separate entities.

The agreement, due at the end of next March, will create a turnover of $ 26 billion “pure power play services” – Whitman’s words, not ours – with more than 5,000 customers in 70 countries books .

HPE shareholders still own about 50 percent of the company resulting from the merger, based on a capital of $ 4.5 billion. The HPE still receive a cash dividend of $ 1.5 billion cleavage and also spin off $ 1.9 billion of debt, $ 1.8 billion in cash and off $ 2.4 billion of pension liabilities.

Borg brand has not been determined, or at least made public. Whitman will serve on the board of the combined entity and Chief ES Mike Nefkens will partner with the CEO of CSC Mike Laurie, but its exact role has not yet been detailed.

Around $ 1.5 billion of “synergy savings” after the closing of the merger is expected by the two companies. The staff was preparing for change.

“In the medium term, the merger seems to be good for investors and management, but there will be significant job cuts,” he predicted a worker.

sources of the Company, both HPE and CSC have questioned whether the level of redundancies in recent years have affected their ability to meet service commitments, leaving them little labor or skills.

Wall Street analyst Toni Sacconaghi, senior research analyst computer hardware Bernstein, said the “strategic logic is logic” as HPE and CSC are “relatively weak players ITO, in a flat market down.”

“While we are concerned about the potential loss of HPE, including hardware sales with service agreements, we note that HPE and CSC entered into a three year agreement to ensure no loss of product HPE attach.”

He said the spin-off of services means that the remaining HPE will be “much more transactional – and arguably – more vulnerable to margin pressure … especially with customers on deployments move Off- premise.”

Extraction leaves the HPE services with annual revenues of approximately $ 33 billion.

It snacking division help reduce channel conflict for HPE – resellers and distributors representing 70 percent of company revenue.

It competes at the top end of the market, selling to large companies, but is seen as a competitive threat by some in the channel.

The press HPE measure be a technology company, Computacenter boss Mike Norris said. “This is the right thing for HPE in my opinion, as a channel partner that provides clarity and simplifies our relationship that must be good news.”

Computacenter is one of the most important partners across Europe HPE so you need to know.

Krista Macomber, an analyst at TBR analyst data center, the agreed merger HPE service will “run a more concentrated manner opportunities converged data centers and software defined from the infrastructure point of view.”

But he warned that this could also create “obstacles” because customers sought modernization of initial board computer support and are willing to take delivery “as-a-service”.

“The TBR survey indicates that customers of data centers are becoming HPE for the key devices in hand, working with the supplier of a broad consultation and empowerment to support the transformation of widespread TI extending in the same enclosure and outside the establishment of resources and pre-sales. see ”

This in turn means more quality channel partners and service providers as HPE tries to avoid “mistakes in execution” count on them to support more clients.

It was supposed to service providers to give a future of greater and better high-tech, but the HPE merger with CSC and sale of Perot Systems, and IBM Dell issues indicates that this line of thinking was wrong.

Whitman reaches the end of its five-year period instead of the company, and has certainly made great paris than the previous three CEOs. But these spinning off or selling businesses primarily concerned.

It competes at the top end of the market, selling to large companies, but is seen as a competitive threat by some in the channel.

The press HPE measure be a technology company, Computacenter boss Mike Norris said. “This is the right thing for HPE in my opinion, as a channel partner that provides clarity and simplifies our relationship that must be good news.”

Computacenter is one of the most important partners across Europe HPE so you need to know.

Krista Macomber, an analyst at TBR analyst data center, the agreed merger HPE service will “run a more concentrated manner opportunities converged data centers and software defined from the infrastructure point of view.”

But he warned that this could also create “obstacles” because customers sought modernization of initial board computer support and are willing to take delivery “as-a-service”.

“The TBR survey indicates that customers of data centers are becoming HPE for the key devices in hand, working with the supplier of a broad consultation and empowerment to support the transformation of widespread TI extending in the same enclosure and outside the establishment of resources and pre-sales. see ”

This in turn means more quality channel partners and service providers as HPE tries to avoid “mistakes in execution” count on them to support more clients.

It was supposed to service providers to give a future of greater and better high-tech, but the HPE merger with CSC and sale of Perot Systems, and IBM Dell issues indicates that this line of thinking was wrong.

Whitman reaches the end of its five-year period instead of the company, and has certainly made great paris than the previous three CEOs. But these spinning off or selling businesses primarily concerned.

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