IBM on HP’s Board, Hurd, R&D
Author: Steven Zolman
At IBM, CEO Sam Palmisano has also been critical of both HP’s board, and also the performance of ousted CEO Mark Hurd. Seeing as how HP has had a historically weak central marketing department, and while it was running rudderless without a CEO, it was in a weakened position to defend itself. IBM attacked HP hard, apparently to increase the damage on HP’s image, helping them in the process.
IBM, and in particular, Palmisano viewed Hurd as a CEO who was slowly killing HP in the name of maximizing quarterly returns – and, by extension – market valuation. Palmisano and others resented the adoration Hurd received from Wall Street analysts for what was seemingly crippling long term decisions. In turn, the continued market valuation increase of HP was validating analyst opinions, and was making them more powerful. Ultimately, companies that didn’t listen to analyst recommendations were pounded in the market, and executive payments and longevity suffered.
Post Hurd, Palmisano was sharply critical of the 3Par acquisition by HP, arguing that HP had no choice but to pay around a billion more than market value due to Hurd’s mismanagement of the research and development investments at HP. Palmisano further indicated that due to the underfunding of R&D budgets at HP, IBM no longer considered HP a serious competitor, but that it saw Oracle as a much more serious emerging competitive threat.
IBM recently promoted Steve Mills to the #2 spot in the company (Mills is the division head of IBM’s Software and Systems), which seems to support the view that IBM has Oracle directly in its competitive crosshairs.
Meanwhile, amid steadily climbing profits, and pent up enterprise technology upgrades; IBM’s stock quietly reached a new all-time high on October 11th.
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