IBM CEO Pokes Fun at Rival: "H-P Used to Be Very Inventive"
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According to a report from the Wall Street Journal on Wednesday, International Business Machines Corp. (NYSE: IBM) chief executive officer Samuel Palmisano ripped rival Hewlett-Packard Co. (NYSE: HPQ) for lagging behind the technology curve and forcing out its former CEO, Mark Hurd.
Palmisano said that HP does not worry him as a rival, as he described the company as having lost in ingenuity and needing to make expensive acquisitions to keep up. "H-P used to be a very inventive company. Hurd cut out all the research and development."
The IBM chief told the Journal that he would never have paid what HP did for data-storage provider 3Par Inc. (NYSE: PAR), but added that the company had no choice due to the way it conducts its business.
The Journal report points out that Hurd cut HP’s research and development budget to $2.8 billion or 2.5 percent of the company’s revenue in its last fiscal year, from $3.5 billion or 4 percent of revenue in 2005.
IBM, under Palmisano has continued to invest 6 percent of its revenue on research and development, which last year totaled $5.8 billion in investments.
Palmisano also took HP to task for its handling of Hurd’s dismissal, and the severance package that could be worth $35 million. Hurd is now working for HP’s rival, Oracle Corp. (NASDAQ: ORCL) a month later.
"That is not a good use of shareholder money," said Palmisano. "It was not handled in the best interest of shareholders."
IBM does not compete with HP in the personal computer market, having sold its PC business in 2005 to China’s Lenovo Group for $1.75 billion. "We wanted to get out before it was obvious to everyone," said Palmisano. "I couldn't give it away today."
HP is the world's No. 1 maker of personal computers.
Shares of IBM are down 12 cents to $128.73 in premarket trade on Wednesday, while shares of HP are down 3 cents to $39.26.
Palmisano said that HP does not worry him as a rival, as he described the company as having lost in ingenuity and needing to make expensive acquisitions to keep up. "H-P used to be a very inventive company. Hurd cut out all the research and development."
The IBM chief told the Journal that he would never have paid what HP did for data-storage provider 3Par Inc. (NYSE: PAR), but added that the company had no choice due to the way it conducts its business.
The Journal report points out that Hurd cut HP’s research and development budget to $2.8 billion or 2.5 percent of the company’s revenue in its last fiscal year, from $3.5 billion or 4 percent of revenue in 2005.
IBM, under Palmisano has continued to invest 6 percent of its revenue on research and development, which last year totaled $5.8 billion in investments.
Palmisano also took HP to task for its handling of Hurd’s dismissal, and the severance package that could be worth $35 million. Hurd is now working for HP’s rival, Oracle Corp. (NASDAQ: ORCL) a month later.
"That is not a good use of shareholder money," said Palmisano. "It was not handled in the best interest of shareholders."
IBM does not compete with HP in the personal computer market, having sold its PC business in 2005 to China’s Lenovo Group for $1.75 billion. "We wanted to get out before it was obvious to everyone," said Palmisano. "I couldn't give it away today."
HP is the world's No. 1 maker of personal computers.
Shares of IBM are down 12 cents to $128.73 in premarket trade on Wednesday, while shares of HP are down 3 cents to $39.26.
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