CHICAGO -- This cannot be an easy time for Ann Livermore. When Hewlett-Packard Co. (HP) missed Wall Street's earnings expectations late last week, the blame was placed squarely on the shoulders of the Enterprise Servers and Storage Group, one of the divisions she manages. "Unacceptable" problems within the group cost HP $400 million in revenue and $275 million in operating profit, said HP Chairman and Chief Executive Officer Carly Fiorina just hours before HP announced the sacking of three senior executives within the division.
Though HP says the operational disruptions that caused last quarter's shortfall are now behind it, there are still daunting challenges ahead for Livermore, who, as executive vice president of HP's Technology Solutions Group, manages the company's enterprise storage, systems, services and software products. Livermore must pull off the trick of moving a diverse set of PA-RISC, AlphaServer and HP 3000 customers to HP's Integrity line of Itanium servers, while simultaneously shoring up HP's once-proud storage business, which has been struggling of late.
Livermore, a 22-year HP employee who was considered a front-running candidate for the job that was eventually given to Fiorina, met with Computerworld's Patrick Thibodeau and Robert McMillan of the IDG News Service at HP's annual HP World user conference in Chicago this week to discuss the state of her company. Following is an edited transcript of their conversation.
IDGNS: Why did the enterprise computing group lose money this quarter?
Livermore: There were really a couple of main areas where we didn't execute as well as we needed to this quarter. In the United States, we were transitioning to a new system and set of business processes for our order management and manufacturing operations, and that transition caused more disruption than we had planned.
As a result of that, we didn't ship as many of our servers, particularly our ProLiant servers, as we had planned during the quarter.
In Europe we had some issues around our channel management processes, as the European team centralized some of the claims processes and channel compensation processes. So that was another area where we just didn't execute well. We also had, in a few instances, in EMEA (Europe, Middle-East and Africa) more aggressive discounting than what we had originally planned for.
So the good news -- or the bad news -- is that they are all internal execution issues that we can address ourselves. They're not things that are fundamental weaknesses in our business offerings.
IDGNS: What about the storage group?
Livermore: With the storage business, we introduced a set of new product offerings back in April, which was a strong refresh of the product line, and we have another major set of announcements in September, so we feel good about our product offerings. We are at the point where we want to put in place some additional sales specialists to help in our storage sales, and also we have a few of our value added resellers that we're working with to try to boost … the selling of our products.
IDGNS: You are getting rid of the Alpha chip, and you're moving from PA-RISC to Itanium. Is there any sense that the decline in sales may be indicative of customers just not wanting to move to Itanium?
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