Quarterly Numbers Lend Credence To Whitman’s Plan for HP Breakup

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The numbers suggest that Meg Whitman may be getting the bigger half of the wishbone with Hewlett Packard Enterprise, and also lend support to the basic idea of splitting the company in half.


HP has announced its final quarterly results prior to the break up into Hewlett Packard Enterprise — which will be led by current CEO Meg Whitman — and HP Inc. — to be headed up by Dion Weisler. The numbers suggest that Meg Whitman may be getting the bigger half of the wishbone with Hewlett Packard Enterprise, and also lend support to the basic idea of splitting the company in half.

Of course the new HPE needs a new look, logo, and narrative:

HPE_Social_Media_Reveal_1200x600_B3

Meg Whitman made an observation about the new logo back in April:

Maybe you noticed it, but take a look at the name “Hewlett” in the new design.  This is the first time in our history that the two t’s in Hewlett connect. That connection is symbolic of the partnership we will forge with our customers, partners, and our employees – what we will do together to help drive your business forward.

Ok, I am willing to take that with a grain of salt. We’ll have to see what actually comes from the new HPE, but the numbers tell us something.

First of all, HP’s net income dropped to $900 million, or 47 cents a share, down from $1 billion, or 52 cents a share from the previous year.  But they beat expectations on profit slightly — after restructuring and acquisition charges were excluded — leading to the share price rising in after hours trading. Wall Street seems happy, so far.

And the best news, or perhaps the only good news, is the 2% increase in revenue for the HP enterprise group — the soon to be Hewlett Packard Enterprise — reflecting market uptake of the company’s servers, storage, and networking products.

The negative buzz at the earnings call is all about the other end of the soon-to-be-broken-apart HP: the printer and PC business of HP Inc. Or perhaps we can call it Red Inc. PC sales were down 13%, and the printer business is down by 9 percent.

I can’t find a post with a logo for the new HP Inc., but in a recent interview Weisler seemed to be saying that he’s bullish about 3-D printing as a future for HP Inc., although he veers between wonky details and historical analogies so much it’s hard to tell:

Weisler: If we go way back in time, you had a blacksmith who would make a unique horseshoe for your horse, as an example.  That would be the manufacturing process. With the industrial revolution, the assembly line was created, and over the years we got better at pressing the supply chain, and making that assembly line more efficient. Manufacturing was still in the hands of a few. The internet comes along, and we can collapse and make that supply chain even more efficient and close it. It still was not really a dramatic change. With 3-D printing, you actually get to democratize manufacturing again because anybody can do it.

Now, where does that start? In our view, the greatest amount of value actually starts in the commercial marketplace. Ultimately as these technologies mature, it will make its way into the consumer realm, as well. Some have another strategy to grow from consumer up. I think the reason it has not taken off either in consumer or commercial, is as an industry we have not solved the problem of speed, quality, and cost. If you really want to be instructive to traditional manufacturing processes, you have to have it operate at the right speed, you have to have the right kind of quality, and you have to have an economic model that makes sense. So with multi-jet fusion, we believe we have made a really big breakthrough here.

Those who actually understand the industry well, and understand what we have done, recognize that we are printing copy ten times faster than the fastest printer on the market today.  We can do it with minute accuracy down to 21 microns–  about a tenth of a size of a human hair.  We can do very intricate parts that still have really strong mechanical properties.  Then because of the technique we use to print the part – we do it on a big flat bed – we can do highly economical parts that begin to make a difference. I think initially it will lend itself more towards commercial markets in the near-term.

I admit, I got lost in there. But I do believe that there is an enormous opportunity in 3-D printing, and HP Inc. is well-positioned to attack that.

But I think that Meg Whitman has cleared her decks for the upcoming battle for enterprise infrastructure, and handed off her worst headaches to Dion Weisler. It’s looking like a better idea all the time.

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