BBG Video: Should Hewlett-Packard Even Be in the PC Business?

My chat with @nicolelapin last night on @BloombergWest re $HPQ:

Sphere: Related Content

The HP Board Hires Trusty Bankers to Protect It From Fiendish Imaginary Activist Investors

The HP Empire is under grave threat from peasant shareholders who actually want its stock price to increase. The board must not allow it.

Read the full post in Forbes

Sphere: Related Content

Ray Lane Must Go at HP

How can you be the Chairman of HP after the last 11 months and give yourself a promotion? Ray Lane must go now.

Read the full post in Forbes

Sphere: Related Content

HP's Board of Directors Is Pathetic

This HP Board has screwed up so many times, it's a joke.  They need to be completely dismantled.

Read the full Forbes post

Sphere: Related Content

HP Directors Lack Skin in Game

By Eric Jackson, Senior Contributor09/29/10 - 05:59 AM EDT

Stock quotes in this article:HPQ, ORCL

By the time this article appears, we will likely know the next CEO of Hewlett-Packard(HPQ_). [Actually, we didn't find out yesterday.]

And leading the committee who selected the new CEO is Silicon Valley wunderkind Marc Andreessen. Andreessen was the public face of HP when it ousted former CEO Mark Hurd in August (after granting Hurd an estimated $35 million severance package to get him through in between jobs).

When HP and Oracle(ORCL_) crossed legal swords after Hurd became Oracle's next co-president 30 days after leaving HP, it was apparently Andreessen who called Larry Ellison to smooth things over.

HP shareholders might be surprised to learn, however, that Marc Andreessen owns exactly zero shares in HP. As an HP shareholder, I'm very disappointed that Andreessen and most of his colleagues on the HP board haven't dug into their own (deep) pockets to buy some HP stock.

I'd prefer feeling that my representatives on the board feel the same pain that I do when the stock tanks. For this reason, I've recently filed a shareholder resolution with HP to adopt high stock ownership requirements for all directors. I hope that HP will allow its shareholders to vote on this matter at the spring annual meeting.

Long-term shareholders have been disappointed in HP's stock returns relative to the S&P 500 index return over the last decade. As of Sept. 22, 2010, HP's 10-year stock return was 25.14% vs. -22.64% for the S&P 500.

Over that time period, HP's board has been criticized for lax governance practices, including (1) the recent decision to oust Mark Hurd for questionable behavior, while still paying him a rich severance package, (2) the decision to use "pretexting" to gather information on a Wall Street Journal reporter and some of HP's own directors in 2006, and (3) the decision to pay Hurd $98 million in total compensation (before severance) for the three years prior his departure even though HP's stock return for the three years prior to Aug. 6, 2010, was -2.33%.

The Corporate Library, a corporate governance ratings firm, has consistently rated HP's board as "high risk" for its inability to manage incentive compensation. Nell Minow, co-founder and executive editor of The Corporate Library, has called HP's board "a serial corporate governance offender."

I believe that HP's outside directors would be more vigilant and effective monitors of management, as well as better judges of effective compensation packages (including executive perks such as personal use of corporate aircraft, personal travel and meals expenses, and gross-ups at the expense of shareholders for these executive taxable benefits), if all of them owned a significant equity stake in HP which they had to dig into their own pockets to buy, rather than being granted stock or stock options.

........

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

Sphere: Related Content

BusinessWeek: Investing in Technology M&A

Posted on September 10

By Aaron Pressman

The conventional wisdom used to be that investors should run from technology companies that did too many mergers and acquisitions. But over the past decade, a group of top-tier tech wheelers and dealers has emerged that increased shareholder value with their acquisitiveness. Companies such as Oracle, IBM, and Adobe Systems have successfully used acquisitions to get into new lines of business, expand their customer bases, and grab hot new technologies. Still, some companies consistently overpay or buy yesterday's big breakthrough. An informal survey of tech fund managers, analysts, and consultants yielded a list of companies investors will likely favor on more deal news—and a few they may shun.

Related Story: Oracle Has Customers Over a Barrel
Video: Investing in Tech Giants

Once mainly a hardware vendor of computers large and small, IBM (IBM) has used a sharp acquisition strategy to expand into software and information technology services. After a string of successful additions, including performance management software maker Cognos, and Rational, which makes tools to help programmers write code, IBM announced in July it would pay $1.2 billion for SPSS, a leading developer of software to analyze statistical data. "All the software acquisitions have helped shift the company toward higher margins and faster growing areas," says Ken Allen, manager of the T. Rowe Price Science & Technology Fund. IBM was his 15th largest holding as of June 30.

Salesforce.com (CRM) has always been a poster child for the move from desktop applications to Web-based products. As more computing and data storage have migrated to online servers—the clouds in "cloud computing"—Salesforce has used a series of small acquisitions to keep pace. In 2006 it grabbed wireless software developer Sendia, for example, helping make all its offerings available over mobile phones. "They're doing a good job of pushing each acquisition into their services," says Jeff Kaplan, founder of tech consulting firm Thinkstrategies.

Cisco Systems (CSCO) is the king of bolt-on acquisitions. In a typical deal, Cisco purchases a much smaller company, such as voice-over-Internet gearmaker Sipura, which it bought for $68 million in 2005. Then it uses its manufacturing smarts and sales force to promote cutting-edge products that often fit into existing lines of business. Cisco also uses purchases to diversify and get into new businesses. This year it added Pure Digital Technologies, maker of the Flip digital video camera. "Their goal is to become a larger player in the consumer electronics and networking business," says Ned Douthat, an analyst at Ockham Research in Roswell, Ga.

One company that Richard Parower, manager of the Seligman Global Technology Fund, says never quite makes the right deal at the right price is Microsoft (MSFT)—"the one glaring example of [tech companies] that can't do acquisitions." For example, Microsoft paid more than $6 billion for Web advertising company aQuantive, a price several investors say was far too high. And its on-again, off-again talks to buy Yahoo! have shareholders worried about another surprise deal. T. Rowe's Allen thinks "investors are still discounting the probability they'll do something so risky again." A Microsoft spokesman says: "We buy where it makes sense, where we can accelerate growth, and generally we buy companies early in their history."

Another loser, say investors, is mobile-phone manufacturer Motorola (MOT). "Remember Symbol Technologies and Good Technology, both acquired by Motorola?" says Eric Jackson, founder of Naples (Fla.) money manager Ironfire Capital. "They have disappeared off the face of the tech landscape." Motorola says it's pleased with both deals and notes that Good's programmers are central to building products that use Google's Android mobile-phone software.

Sphere: Related Content

Betting on M&A Skills

We constantly hear about tech companies' strong balance sheets. While some, like Apple (AAPL) and Microsoft (MSFT), seem intent on building the largest pile of cash possible, others will no doubt use their cash to begin making acquisitions in the next year.

One lens to apply to your stock selection then should be judging a company's M&A purchase and integration skills. Some companies -- like Yahoo (YHOO) and EBAY -- have a track record of making lots of unrelated acquisitions at inflated prices (today we read about YHOO shutting down its 1999 GeoCities group because it's not competitive). EBAY is now in the process of unwinding itself from that failed approach and it's likely that things will change in this regard under Carol Bartz at YHOO.

When MSFT has made acquisitions (like aQuantive or its investment in Facebook), it's over-paid, giving the sense it's more desperate than thoughtful. Fears about its lack of M&A integration skills among its management team helped push investors to urge Ballmer to drop the YHOO bid last year.

The three tech companies who have proven themselves adept at making strategic deals at fair prices and then quickly integrating them into the fold are Oracle (ORCL), IBM, and Cisco (CSCO). There are more deals ahead for the sector and these companies have an edge for their shareholders in seeking out the best of what's for sale.

Position: Long MSFT.

Originally published in RealMoney.com on 4/24/2009 9:43 AM EDT

Sphere: Related Content

Oracle Wants Sun's Installed Base

It's fitting that IBM (IBM) and Oracle (ORCL) have been the ones fighting over Sun Micro (JAVA). Both have taken an aggressive approach to growing their top and bottom lines -- compared to, say, Microsoft (MSFT). The markets have rewarded growth over increased EPS as a result of retiring shares alone.

Sun Micro is a shell of its former self 10 years ago. It is simply being put to rest through this deal. For years now, it has struggled selling its older expensive OS (SPARC Solaris) in the face of Linux. Java has been popular but hasn't replaced that declining Solaris revenues.

Left alone, Sun would have continued to shrink. Why do ORCL and IBM want to buy them? Installed base. Both want those relationships which Sun has had for years so they can upsell new ORCL and IBM gear.

Sun's shareholders will ensure the deal gets done this time.

Originally published in RealMoney.com on 4/20/2009 7:56 AM EDT

Sphere: Related Content

All Public Company CEOs Should be Required to Attend Quarterly Earnings Calls

This morning, Vikram Pandit decided not to attend Citi's (C) earnings' call. To me, this is an affront to any C shareholder. Even in the best of times, a public company CEO should see it as a job requirement to be on these 4x a year calls. After taking billions from taxpayers, I'm amazed that Pandit couldn't fit this in his schedule and left CFO Ned Kelly to soldier on without him. Whatever conflict Pandit had, he should have rearranged it. The optics are terrible and optics matter these days.

Next week, Microsoft (MSFT) will report. Until the last earnings' call in January, Steve Ballmer had routinely skipped these opportunities to communicate with his shareholders -- leaving his CFO, Chris Liddell, to fend for himself. I simply can't understand such reasoning. Do you think Larry Ellison skips out on these kinds of calls? Never.

We shouldn't need Mary Schapiro at the SEC to have to mandate this: public company CEOs need to simply start seeing these calls as obligations -- not distractions.

Originally published in RealMoney.com on 4/17/2009 3:39 PM EDT

Sphere: Related Content