Salto Partners

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Hewlett Packard’s Q1 Results

Today Salto Partners’ Andreas Scherer talked with E-Commerce Times about Hewlett Packard’s first quarter earnings for the new fiscal year 2013. No matter how one looks at the numbers, they ain’t pretty.

HP reported first quarter earnings of $1.6 billion, or 63 cents a share, on revenue of $28.4 billion. This is down 6 percent from a year ago. Some analysts expected worse, so the good news is that is not as bad as some believed it would be.

 If you take a look under the hood you’ll see that all major business units are down year over year and quarter over quarter.

 1. The Printing and Personal Systems delivered $14.13 billion revenue. That is $1.02 billion less revenue compared to the $15.15 billion revenue it did in Q1 of 2012. This division of HP is competing in a tough market segment without any significant market share in hot segments such as tablets and smart phones.

 2. The Enterprise Group delivered $6.984 billion revenue. It dropped more than $475 million compared to last quarter. The EBITDA contribution of this group has declined year over year and quarter over quarter.

 3. Enterprise Services delivered $5.919 billion revenue. It dropped more than $433 million quarter over quarter. What’s even worse. The group only delivered only $76 million EBIDTA. A service organization operating at 1.3 percent EBITDA margin is at this revenue level a significant concern. Another 5-10% drop in revenue and HP is going to lose a lot of money in this business unit.

Now, Meg Whitmen gave a more upbeat outlook for the rest of FY 2013. This could mean that the sales pipeline across the major business units looks stronger than the current numbers indicate. It could mean that there are new products in the pipeline that can make an instant impact. Or it could mean that HP’s strategy is simply hope. The next quarters will be telling which way the Silicon Valley icon is going.

You find the full article here. 

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Yahoo Acquires Alike

Recently Salto Partners’ Andreas Scherer talked to E-Commerce Times about Yahoo’s acquisition of Alike. Here is the full analysis. 

Yahoo is picking up speed and Marissa Mayer is the driving force behind this. She defines Yahoo’s core business in a simple way: It’s about delivering personalized content. Having a sophisticated mobile strategy is a critical part of this vision. Smart phones offer information about time, location as well as preferences of a user. The mobile internet allows news ways to combine relevant content with smart advertising.

Without any doubt, the Alike acquisition will boost Yahoo’s mobile presence. It lets a user know about nearby restaurants, bars or any other type of venue that is like the ones she is already a fan of. Users can share their preferences also on their Facebook and Twitter accounts. The app can serve as a focal point of Yahoo’s future strategy. Along with this acquisition comes the inevitable clean-up of past attempts to compete in the mobile arena. The company has in total more than sixty apps. Marissa has to determine which ones continue to make sense. It will be likely a number between 12 – 15 when it is all set and done. The mobile strategy of Yahoo needed an overhaul. The Alike acquisition could be the turning point that brings a promising new technology and new talent into the company.

In the big picture Yahoo has to get three things right: Content, Distribution and Monetization. Marissa Mayer already overhauled Yahoo’s approach to monetization by entering into a strategic relationship with Google after recognizing that the Bing partnership didn’t grow combined market share. With the Google partnership it has access to the adsense platform – a well-oiled advertising machinery. Overhauling the mobile strategy helps Yahoo to catch up in a mission critical space. It remains to be seen what else Yahoo plans to do to provide premium personalized content.

One thing is for certain. Things are changing over at Yahoo. And they continue to do so until Marissa gets it right.

You can find the E-Commerce Times article on this subject here.

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Amazon Upgraded by Morgan Stanley

Interview with E-Commerce Times on Amazon which continues to be Wall Street’s darling. Morgan Stanley justified the upgrade by pointing towards Amazon’s growth potential in emerging markets such as China and Brazil as well as its strong fulfillment network. Indeed Amazon has been aggressively investing in BRIC countries implementing a “winner takes all” – strategy. It will continue to do so in 2013 and beyond. Last year the company made headlines by building out same-day delivery capabilities here in the US. Presumably these capabilities will also find their way into international markets. Once the build out is complete there will be no other company that is commanding a global ecommerce infrastructure of that magnitude. Amazon will operate in its own class.

There are a few watch-outs. First, making big bets by entering new markets as well as building out expensive warehouse infrastructure requires a lot of money. This strategy will impact Amazons ability to produce meaningful profits in 2013. Second, there is a high level of execution risk associated with such a strategy too. Brazil. Russia. India. China. These are vastly different markets, ecosystems and cultures. It takes a high degree of confidence to go to these places and make it happen all at once.

Amazon has proofed critics wrong in the past. The markets like its chances to capture a significant portion of the world’s ecommerce sales. Morgan Stanley predicts this number to hit $1 trillion in 2016. Amazon’s market share is projected to be well above 20%. Now, that would be exciting.

See the full article with E-Commerce Times here.

 

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T-Mobile and Apple

T-Mobile mentioned almost en passant that it will finally start offering Apple iPhone in 2013. Now, that is newsworthy. The carrier has tried for years to give its customers access to Apple’s smartphone. What does it mean for T-Mobile and its customers?

First of all, this is one more arrow in the quiver of T-Mobile against the ATT’s for the world. Customers can move from ATT to T-Mobile without having to purchase outright the still very expensive device.

Second, the deal involves an new, unannounced iPhone model. If we dare to speculate then this will be in all likelihood an LTE ready iPhone 5. This move would fit nicely with the company’s overall strategy. As T-Mobile prepares for its merger with MetroPCS the company is upgrading its LTE infrastructure heavily. The idea is that both companies will upgrade their existing client basis aggressively to the new network. The iPhone 5 fits perfectly in this picture.

All in all this is good news for consumers. More choices, more competition and the hope for more speed in 2013.

You can read more in this E-Commerce Times Article.

I also commented on this deal in a Forbes interview.

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RIM

Just gave an interview to E-Commerce Times on RIM. Here is some more background information.

There was a time when a Blackberry was the must–have-gadgets for executives, venture capitalists and business people. Those days are long over. In a recent report published by the NY Times (http://graphics8.nytimes.com/packages/pdf/technology/20121128_RIM.pdf) RIMs market share went down in most key markets between Oct 2011 and Oct 2012. Here are a few examples:

Great Britain: from 19% to 7.9%
United States: from 8.5% to 1.6%
Spain: from 23.7 % to 3.4%
Brazil: from 8.7 to 2.7%
Only in Germany RIMs market share increased from 1.6% to 2.5% in the same timeframe.

 iOS and Android based devices have the commanding lead in all globally relevant markets. That’s what RIM is up against. Now, the early reviews of the new Dev Alpha B were positive. With BB10 RIM was able to create a competitive platform. However, it takes much more to win back market share the company has lost to iOS and Android.

First of all, RIM needs to win back the hearts and minds of the consumer. Then, they have to convince mobile carriers to aggressively push its devices. Those are two major preconditions for success. It will be interesting to see which niche RIM is trying to carve out for itself. There could be room for a third mobile platform at a lower price point.  Having that said, it’s likely a rocky road ahead for RIM. Even though the company is vertically integrated manufacturing its own devices, it’s an open question how well RIM will be able to drive the costs down to a point that they can become and remain profitable in serving a niche market. For now, investors have to choose between the “too little too late” or the “niche player” scenario. It will take a lot more for RIM to return to its glory days.

You can read more here.