Posts Tagged ‘HP’

HP adapts to new reality of smaller outsourcing deals

January 7th, 2014

The way firms are using outsourcing is undergoing a fundamental shift, with far-reaching consequences for Hewlett-Packard’s Enterprise Services arm.

HP EVP and Enterprise Services general manager Mike Nefkens said his division is adapting to a decline in the size of outsourcing contracts.Outsourcing17

“The way the business used to work, it used to be the very big horizontal outsourcing where you take over people. Those really aren’t happening that much anymore,” Nefkens told ZDNet at the HP Discover conference in Barcelona last month.

“What we’re seeing now is much smaller deal sizes and the customers are wanting much more labour expertise versus just labour arbitrage,” he said.

“So we have to shift along with that and we’re making lots of changes in our portfolio.”

Last week, Hewlett-Packard spelt out the impact of the fall in the value of outsourcing contracts. It blamed a net revenue fall at Enterprise Services on “contractual price declines in ongoing contracts due in part to weak public-sector spending and enterprise IT demand” in a regulatory filing to the US Securities and Exchange Commission (SEC).

The net revenue from Enterprise Services, which provides infrastructure, app and business-process consulting, outsourcing and support, decreased 8.2 percent in the 2013 fiscal year, HP told the SEC.

“We’re focused of restructuring and on a ton of training for our people, in regards to our offerings, in regards to the way we deliver and even the way we sell, just for the fact that we’ve got so much smaller deals now,” Nefkens told ZDNet at the Barcelona event.

“We’ll be busy with that for the next three or four years.”

HP Enterprise Services was created in 2009 from the amalgamation of the company’s existing consulting and outsourcing business with services giant EDS, which HP had acquired in 2008 for $13.9bn.

According to Nefkens, Enterprise Services now needs to sign 2,000 deals a year to make the revenue it would previously have generated from 1,000 contracts.

However, he said HP CEO Meg Whitman has highlighted that Enterprise Services, which is in the first year of a five-year transformation, had met all its objectives.

The business has signed over 400 new clients and managed more than 10,000 large-scale transformation or application projects over the year, Nefkens said.

“We see our business growing in big data and security — we see massive growth, much more work there than we’ve ever had,” he said.

“We have a lot of contracts that are expiring that were old EDS contracts that we were using alliance partners for and we’re now able to refresh those with HP products and software.”

Against those gains, Enterprise Services has also lost some big clients. In October 2012, General Motors said it was taking IT operations back inhouse and hiring some 3,000 HP staff in the process.

However Nefkens said the company had successfully managed those types of situation.

“Those clients caused our revenue to go down but we were actually able to keep our operating margins moving in the right direction while we transitioned those businesses. So, a very solid year for us in the first year of the transformation,” he said.

One of the biggest changes for Enterprise Services is the amount of technical involvement client companies want in the relationship with HP, according to Nefkens.

“It used to be, ‘OK. Just run my stuff’. Now they really want to be involved in the technology, how does it integrate, what are the details. So that’s also a change in the way we sell,” he said.

As an instance of the type of project his business is now involved in, Nefkens cited the big data system that allows stock-car racing operation NASCAR to gauge public interest during races by monitoring public Twitter and Facebook feeds.

Using Autonomy big-data analytics technology, television producers for example picked up on a high level of interest in one of the racer’s wife and children and changed the contents of the live television show to do a special on the driver’s family.

“This is a project that we drove for them. We host it and we manage it and the tools are there and we have one or two people on site to drive that. That’s a great example but it’s not a big outsource deal,” Nefkens said.

Source:http://www.zdnet.com/hp-adapts-to-new-reality-of-smaller-outsourcing-deals-7000024728/

HP shuffles top ranks, dashes 2014 growth hopes

August 22nd, 2013

Hewlett-Packard Co shuffled its top ranks on Wednesday, shifting a star executive to a role identifying acquisition targets after a disappointing performance from the division he oversaw curtailed the No. 1 PC maker’s 2014 outlook.A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto

Shares in HP dropped 8 percent in after-hours trading after the company reported a 9 percent decline in Enterprise Group revenue, the company’s second-largest division and a critical component of CEO Meg Whitman’s plan to transform HP into a provider of enterprise computing services able to take on IBM and Cisco Systems Inc.

Whitman replaced Dave Donatelli with Bill Veghte at the helm of the Enterprise Group on Wednesday, calling the unit’s performance “very disappointing.” That, plus a persistent decline in PC sales as tablets and smartphones revolutionize computing, led her to backpedal from when she said in May that 2014 revenue growth was still possible.

“What has changed about 2014′s outlook is a couple of things – Enterprise Group’s performance especially during the quarter,” she told analysts on a conference call. “Weak execution has amplified the market challenges we know exist.”

“It’s unlikely … that we’ll see the growth in 2014 that I had hoped.”

The Silicon Valley stalwart, which has been undergoing a radical reshaping under Whitman for the past two years, is grappling with weak IT spending globally. Poor sales and product execution, along with weakening demand for the industry-standard servers that comprise the largest part of its corporate hardware business, is aggravating the situation.

Donatelli, a rising star that Wall Street analysts once considered a candidate for a tech CEO position, relinquishes his post as chief of the unit that sells servers, storage and software services to organizations. He will instead seek out early-stage technologies for investment, the company said.

The executive engineered some of the company’s most significant acquisitions in past years, including of 3Com and 3PAR, which helped catapult HP deeper into the networking and storage markets, respectively.

Whitman said the computing giant was “back in the market” for strategic acquisitions, which she saw as essential to a continued transformation.

Veghte takes over immediately as head of the division, and will not be replaced as chief operating officer. Veghte joined HP in 2010 after a 20-year career at Microsoft Corp, which culminated in his heading the business side of the Windows unit. He also worked on developing and marketing Microsoft’s server software.

Veghte’s experience stand him in good stead as corporate IT infrastructure moves toward a cloud- and software-based model, versus the traditional structure of large servers on site to store and process data.

“He’s going to be looking at the segment through a different lens,” said Shebly Seyrafi, an analyst at FBN Securities.

REVENUE SLIDES

CEO Whitman, who took the reins at HP in September 2011, is trying to revive the company after years of board turmoil and a backdrop of rapidly declining global PC sales, but has not yet halted revenue declines.

Donatelli is the latest executive with a strategic role to have been replaced. In June, HP moved PC division chief Todd Bradley into a new job aimed at improving its China business and distribution relationships around the world, a move many analysts deemed a demotion.

Donatelli’s division accounts for about a quarter of the company’s overall sales.

In all, the company recorded revenue of $27.2 billion in the fiscal third quarter, down from $29.7 billion a year earlier. That missed the $27.3 billion in sales that Wall Street had expected, on average.

Net income in the quarter came to $1.39 billion or 71 cents a share, compared with an $8.9 billion loss a year earlier when the company swallowed a big writedown of the IT outsourcing business it inherited when it bought Electronic Data Systems for close to $14 billion in 2008.

Excluding one-time items, the company earned 86 cents a share, matching the 86 cents average forecast by analysts on Thomson Reuters I/B/E/S.

Shares in the company slid to $23.42 in after-hours trade, from a close of $25.38 on the New York Stock Exchange.

Source:http://au.news.yahoo.com/technology/news/article/-/18601154/hp-switches-executives-as-revenue-slides/

HP shuffles execs as Q3 revenue slides

August 22nd, 2013

Hewlett-Packard Co has replaced Dave Donatelli with Bill Veghte at the helm of its second-largest business division , reassigning the star executive to a new role identifying potential tech acquisitions as it reported a larger-than-expected eight per cent slide in third-quarter revenue.A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto

The world’s largest personal computer maker recorded revenue of $US27.2 billion in the fiscal third quarter, down from $US29.7 billion a year earlier, as PC sales continued to slide amid a shift toward mobile computing, and its enterprise business grappled with tepid worldwide information technology spending.

It missed the $US27.3 billion in sales that Wall Street had expected, on average.

Donatelli, a rising star that Wall Street analysts once considered a candidate for a tech CEO position, relinquishes his post as chief of the Enterprise Group, which sells server, storage and software services to large organisations. He will now focus on identifying early-stage technologies for investment, the company said.

Veghte, HP’s chief operating officer, takes over immediately. Veghte joined HP in 2010 after a 20-year career at Microsoft Corp, which culminated in heading the business side of the Windows unit. He also worked on developing and marketing Microsoft’s server software.

CEO Meg Whitman, who took the reins at HP in September 2011, is trying to revive a Silicon Valley icon that has been sideswiped by the rapid decline of global PC sales.

Donatelli is the latest executive with a strategic role to have been replaced. In June, HP moved PC division chief Todd Bradley into a new job aimed at improving its China business and distribution relationships around the world, a move many analysts deemed a demotion.

The Enterprise Group is HP’s largest business unit after personal computers, and is a critical component of Whitman’s efforts to boost margins and profitability, while trying to minimize revenue declines.

The division, which recorded a nine per cent decline in sales in the second quarter, accounts for about a quarter of the company’s overall sales.

Overall net income in the quarter came to $US1.39 billion or 71 cents a share, from an $US8.9 billion loss a year earlier when the company swallowed a big writedown of the IT outsourcing business it inherited when it bought Electronic Data Systems for close to $US14 billion in 2008.

Excluding one-time items, the company earned 86 cents a share, matching the 86 cents average forecast by analysts on Thomson Reuters I/B/E/S.

Source:http://www.businessspectator.com.au/news/2013/8/22/technology/hp-shuffles-execs-q3-revenue-slides

HP switches key executives, dashes hopes for 2014 revenue growth

August 22nd, 2013

Hewlett-Packard Co shuffled its top ranks on Wednesday, reassigning a star executive to a new role identifying potential acquisitions, as the world’s largest personal computer maker reported a larger-than-expected slide in revenue and forecast zero sales growth next year.A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto

Its shares dropped 5 percent in after-hours trading.

The Silicon Valley stalwart, which has been undergoing a radical reshaping under Chief Executive Meg Whitman for the past two years, is looking for ways to escape the decline in PC sales as tablets and smartphones revolutionize computing.

Whitman, who said in May that fiscal 2014 revenue growth was still possible, told analysts on a Wednesday conference call that growth next year was now “unlikely” given the poor performance of the Enterprise Group and PC divisions.

“My read was that fiscal 2014 growth was a stretch goal rather than a baseline assumption,” said Shebly Seyrafi, an analyst at FBN Securities. “That has become more challenging.”

To meet that challenge, Whitman made a key personnel move on Wednesday, replacing Dave Donatelli with Bill Veghte at the helm of HP’s second-largest business division, the Enterprise Group.

Donatelli, a rising star that Wall Street analysts once considered a candidate for a tech CEO position, relinquishes his post as chief of the unit, which sells server, storage and software services to large organizations. He will now focus on identifying early-stage technologies for investment, the company said.

The executive engineered some of the company’s most significant acquisitions in past years, including of 3Com and 3PAR, which helped catapult HP deeper into the networking and storage markets, respectively.

Whitman told analysts on the conference call the computing giant was “back in the market” for strategic acquisitions, which she saw as essential to a continued transformation.

Veghte takes over immediately as head of the division, and will not be replaced as HP’s chief operating officer. Veghte joined HP in 2010 after a 20-year career at Microsoft Corp, which culminated in his heading the business side of the Windows unit. He also worked on developing and marketing Microsoft’s server software.

REVENUE SLIDES

CEO Whitman, who took the reins at HP in September 2011, is trying to revive the company after years of board turmoil and a backdrop of rapidly declining global PC sales, but has not yet halted revenue declines.

Donatelli is the latest executive with a strategic role to have been replaced. In June, HP moved PC division chief Todd Bradley into a new job aimed at improving its China business and distribution relationships around the world, a move many analysts deemed a demotion.

The Enterprise Group is HP’s largest business unit after personal computers, and is a critical component of Whitman’s efforts to boost margins and profitability, while trying to minimize revenue declines.

The division, which recorded a 9 percent decline in sales in the latest quarter, accounts for about a quarter of the company’s overall sales.

In all, the company recorded revenue of $27.2 billion in the fiscal third quarter, down from $29.7 billion a year earlier, as PC sales continued to slide amid a shift toward mobile computing, and its enterprise business grappled with tepid worldwide information technology spending.

It missed the $27.3 billion in sales that Wall Street had expected, on average.

Overall net income in the quarter came to $1.39 billion or 71 cents a share, compared with an $8.9 billion loss a year earlier when the company swallowed a big writedown of the IT outsourcing business it inherited when it bought Electronic Data Systems for close to $14 billion in 2008.

Excluding one-time items, the company earned 86 cents a share, matching the 86 cents average forecast by analysts on Thomson Reuters I/B/E/S.

Shares in the company slid more than 5 percent to $24.07 in after hours trade, from a close of $25.38 on the New York Stock Exchange.

Source:http://www.reuters.com/article/2013/08/21/us-hp-results-idUSBRE97K15320130821

Carlyle, others eyeing HP’s MphasiS stake: sources

May 31st, 2013

Private equity giants Carlyle Group LP (CG.O) and Blackstone Group LP (BX.N) as well as Indian outsourcers L&T Infotech and Tech Mahindra Ltd (TEML.NS), are lining up bids for Hewlett-Packard Co’s (HPQ.N) $1 billion stake in India’s MphasiS Ltd (MBFL.NS), several sources involved in the process said.outsourcing41

Buyout firms Advent International and Bain Capital LLC are also in talks to bid for HP’s 60.5 percent stake in MphasiS, an IT services exporter, said the sources, who declined to be named as details of a potential deal are not yet public.

Tech Mahindra and L&T Infotech, mid-range players in India’s $108 billion IT outsourcing industry, may team up with private equity firms to make bids for the MphasiS stake, two of the sources told Reuters.

MphasiS, which generates roughly half its revenue by providing services to HP’s clients, has a market value of $1.8 billion. Reports of a potential stake sale to private equity firms emerged about a month ago.

Preliminary bids for the MphasiS stake sale are likely to be invited by the end of June, sources said, and a deal could be finalised during the July-September quarter.

MphasiS was formed in 2000 and six years later Electronics Data Systems Corp acquired a majority holding in the company. In 2008, EDS was acquired by HP, which resulted in the transfer of the shareholding to the world’s largest PC maker.

A deal would be one of the largest in India’s showpiece IT outsourcing services sector. U.S.-listed iGate Corp (IGTE.O) bought a controlling stake in India’s Patni Computer Systems for $1.2 billion in 2011.

The iGate deal valued Patni at about eight times EBITDA (earnings before interest, tax, depreciation and amortisation), and sources said MphasiS is likely to command a lower valuation since the bulk of its business depends on subcontracting by HP.

Officials with HP, MphasiS, Carlyle, Blackstone, Advent, Bain, Tech Mahindra and conglomerate Larsen & Toubro (LART.NS), which owns L&T Infotech, all declined to comment.

MID-RANGE PLAYER

MphasiS competes with Indian outsourcing services providers, including market leaders Tata Consultancy Services Ltd (TCS.NS), Infosys Ltd (INFY.NS) and Wipro Ltd (WIPR.NS).

India’s top outsourcing companies, including Infosys and TCS, are not seen as possible bidders for the MphasiS stake as their acquisition strategies are driven by the need to add new service lines or enter new countries, some of the sources said.

“This is mainly going to be a competition among the PE firms with some mid-sized companies expected to jump into the fray in the final stages,” said one of the sources.

“The buyer will have to focus a lot on sales and marketing in the first few years to grow the non-HP business,” which is why a private equity firm may team up with an IT services company, he said.

HP is expected to continue to send IT services contracts to MphasiS over the short to medium term after the sale of its stake and its contribution to the Indian unit’s revenue will gradually decline after that, some of the sources said.

Besides MphasiS, HP has its own IT delivery centres in India where it employs thousands of engineers who provide services and develop software applications for its global clients.

Some of the sources said HP’s move to sell its stake in MphasiS is part of CEO Meg Whitman’s turnaround plan, which includes expanding into markets and areas with longer-term potential. HP could also use some of the sale proceeds to reduce its $2.9 billion debt, they said.

Private equity investments are showing signs of a pickup in India. KKR & Co LP (KKR.N) in April agreed to buy a controlling stake in India’s Alliance Tire Group from Warburg Pincus for roughly $500 million, sources have said.

Source:http://in.reuters.com/article/2013/05/31/mphasis-hp-idINDEE94U05D20130531

Moonshot fails to lift HP’s server revenue

May 24th, 2013

HP’s plans to use the low-powered Moonshot servers to rekindle its ailing commodity server business has yet to deliver meaningful benefits.

In the company’s second quarter financial results, revenue in its commodity server business was 12% lower than the same period last year, while its Itanium business-critical systems revenue was down 37%. The PC business plunged 20%, with commercial PC revenue down by 14% and the consumer PC revenue down by 29%. Enterprise services revenue declined 8% year on year.

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Overall, the company reported second quarter net revenue of $27.6bn, down 10% from the prior year.

In a transcript of the earnings call posted on the Seeking Alpha financial blogging site, CEO Meg Whitman said: “We need to do a better job growing the top line and defending our margins.”

She said Moonshot could revolutionise the economics of the datacentre and was fundamental to HP’s server strategy. “We are confident that Moonshot can redefine the market to HP’s advantage,” Whitman added.

Moonshot is HP’s new server family designed for hyperscale computing. HP claims it will enable datacentres to run more servers, using less power.

“We under-performed in both the Hyperscale and mainstream server markets,” said Whitman. “Our under-performance was driven by both market conditions and our own execution. In Hyperscale, we expect Moonshot will give us a differentiated offering, but the transition is going to take time.”

She admitted that HP has around 1,000 customers using its CloudSystem product, which is used for deploying private cloud.

Enterprise services delivered revenue of $6bn, down 8% year on year. IT outsourcing revenue was $3.7bn, down 6% year on year, driven by contractual revenue run-off and pricing pressures.

Commenting on application and business services revenue, HP chief financial officer Catherine Lesjak said: “We continue to develop our IT in this space, but need to ramp our sales team more aggressively to capture the market opportunity. We saw triple-digit year-over-year growth in our strategic enterprise services revenue such as cloud, security, application modernisation and big data.”

Software revenue was down 3% year on year. “In software, we saw continued challenges in the traditional IT management business, which was particularly weak in Europe,” said Whitman.

Networking revenue was up 1% year on year at $618m. HP expects this to grow as software-defined networking gains momentum.

Source:http://www.computerweekly.com/news/2240184593/Moonshot-fails-to-lift-HPs-server-revenue

NS&I selects Atos over HP and Capita in £660m outsourcing deal

May 22nd, 2013
State-owned investment organisation NS&I has awarded Atos a £660m, seven-year outsourcing contract, which it says will save taxpayers more than £400m over the contract period. The contract is for the delivery of customer-facing and back-office services to NS&I’s 25 million customers, as the firm looks to switch to digital channels.
This will include the addition of a mobile-optimised website, apps, web chat and co-browsing to help guide customers through the website. Improvements will also be made to existing services that are available online.
NS&I initially outsourced its operations to Siemens Business Services in 1999, with the company subsequently being acquired by Atos in July 2011. The deal is estimated to reduce NS&I’s core operating costs by 55 per cent, which equates to about £530m in cost savings.
Atos was chosen ahead of HP and Capita, following a re-tender process that started back in 2011. The three companies were shortlisted in February 2012.
“The new contract will ensure we can deliver our vision of enhancing further the services we offer to savers over the next seven years. I would like to congratulate Atos on winning the contract and also thank both Capita and HP for the time and energy they invested in the re-tender process,” said Jane Platt, chief executive of NS&I.
“Taxpayers across the country will also benefit as the contract will deliver a saving of over £400m by 2021 – building on the £530m already saved under the current contract,” Sajid Javid MP, economic secretary to the Treasury, added.
NS&I said that the cost savings for taxpayers would come from the increasing customer use of direct sales channels, improvements in technology and processes, and supporting the growth of NS&I’s leveraging activity.

State-owned investment organisation NS&I has awarded Atos a £660m, seven-year outsourcing contract, which it says will save taxpayers more than £400m over the contract period. The contract is for the delivery of customer-facing and back-office services to NS&I’s 25 million customers, as the firm looks to switch to digital channels.

This will include the addition of a mobile-optimised website, apps, web chat and co-browsing to help guide customers through the website. Improvements will also be made to existing services that are available online.

NS&I initially outsourced its operations to Siemens Business Services in 1999, with the company subsequently being acquired by Atos in July 2011. The deal is estimated to reduce NS&I’s core operating costs by 55 per cent, which equates to about £530m in cost savings.

Atos was chosen ahead of HP and Capita, following a re-tender process that started back in 2011. The three companies were shortlisted in February 2012.

“The new contract will ensure we can deliver our vision of enhancing further the services we offer to savers over the next seven years. I would like to congratulate Atos on winning the contract and also thank both Capita and HP for the time and energy they invested in the re-tender process,” said Jane Platt, chief executive of NS&I.

“Taxpayers across the country will also benefit as the contract will deliver a saving of over £400m by 2021 – building on the £530m already saved under the current contract,” Sajid Javid MP, economic secretary to the Treasury, added.

NS&I said that the cost savings for taxpayers would come from the increasing customer use of direct sales channels, improvements in technology and processes, and supporting the growth of NS&I’s leveraging activity.

Source:http://www.computing.co.uk/ctg/news/2269492/ns-i-selects-atos-over-hp-and-capita-in-gbp660m-outsourcing-deal

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