IBM CEO takes shots at HP

by Darren Anderson

Sam PalmisanoThe notoriously quiet and conservative chief executive of IBM, Samuel Palmisano, stepped into the limelight for a few moments Tuesday and provided some interesting thoughts at the Wall Street Journal Viewpoints Executive Breakfast. He offered some very candid opinions on such topics as HP's dismissal of Mark Hurd, the company's acquisition strategy and its lack of focus on R&D investment.

On the reported $34.6 million exit package that Mark Hurd received upon dismissal as the company's CEO:

 "They spent a lot of money to keep him for an hour. That to me was not handled in the best interests of shareholders."

Shortly after Mr. Hurd's dismissal from HP, he basically crossed the street and joined the executive team at Oracle as the company's President, reporting to long-time company founder and CEO Larry Ellison. HP is in the works of suing Mr. Hurd, as the company claims that its trade secrets are at risk if the ex-CEO is on the competitors roster. 

On HP's acquisition of 3PAR and ArcSight:

“We’d never do a 3Par or the one (ArcSight) yesterday. We don’t have to.”

In the past month, HP has spent frivolously acquiring 3Par in a deal worth US$2.4 billion before purchasing ArcSight for another US$1.5 billion earlier this week. Of particular scrutiny is the 3PAR deal. Prior to Dell's initial offer the company was trading at US$18 per share. After a series of offers by Dell and HP, the purchase price per share increased a staggering 83 per cent to US$33 per share. Comparatively, HP acquired ArcSight at a 24 per cent premium or US$43.50 per share.    

On IBM's R&D Investment:

"If you're pushing technology you will get returns"

At the breakfast meeting, Palmisano said that he respects companies that have high investment levels in new technologies, like Oracle. He also mentioned that he is less worried about competing with HP because they do not invest enough in research and development. The numbers support Palmisano's claim too, as IBM invested 6.1 per cent of its revenues in R&D activities in fiscal 2009 compared to the 2.5 per cent that HP dedicated to technology innovation.

It was great to see the IBM CEO stick his neck out there and provide his thoughts on the current happenings within the global IT Industry. For a full breakdown on the topics that the IBM head touched on, take a look here.

Mississauga, Ontario, Canada

The world’s largest technology company, HP brings together a portfolio that spans printing, personal computing, software, services and IT infrastructure at the convergence of the cloud and connectivity, creating seamless, secure, context-aware experiences for a connected world. more

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Markham, Ontario, Canada

IBM Canada Ltd. is a leading provider of advanced information technology products and services. As a technology-based solutions company, IBM is dedicated to helping its customers solve their business problems, pursue new market opportunities and become more productive through the innovative application of e-business and Internet technology. Headquartered in Markham, Ontario, IBM Canada has... more

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Darren Anderson

Darren Anderson

Darren Anderson is an analyst at Branham Group Inc., a leading industry analyst and strategic consulting firm servicing the global information technology marketplace. Each year he coordinates the Branham300, an annual ranking of the top 300 Canadian technology companies, allowing him to keep tabs on the happenings within Canada’s Information and Communication Technology industry. Beyond his... more

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