Master of share-buybacks and revenue-shrinkage does what it does best.
Hewlett Packard Enterprise, which blew nearly $2 billion on debt-funded share buybacks over the three quarters of its fiscal year 2017, even as revenues fell 7%, will do the only other thing that, in addition to share buybacks and revenue-shrinkage, it has been doing really well for years since it was still the full-blown Hewlett-Packard: Mass layoffs.
The company will ax about 10% of its employees. That would amount to at least 5,000 workers of its workforce of about 52,000. The cuts will hit employees, including managers, in the US and abroad, “people familiar with the matter” told Bloomberg.
CEO Meg Whitman has been redoing the company since she took the job in 2011, after she lost out in her efforts to become governor of California. At the time, Hewlett-Packard, as it was still called, had 350,000 employees. After serial layoffs came some big divestitures: PCs, printers, business services, and some software units had to go. This includes the largest breakup in US corporate history, spinning off the PC and printer division to create two companies, her HPE and the PC business, HP Inc.
HPE sells cloud services, hardware, and software; servers, storage equipment, networking equipment, integrated systems, and software; consulting; services such as operational support; and financial services, such as IT financing. It is now down to about 52,000 employees. After the layoffs, it will be closer to 47,000 – a mere shadow of the former Hewlett-Packard. And it will continue to shrink.
In June, she announced a three-year plan, the HPE Next initiative, to cut costs by $1.5 billion. But that’s not what these layoffs are about. These layoffs are part of a separate plan to slash costs in the second half by $200 million to $300 million.
So this is just the beginning. HPE Next will then take over with more cuts to come.
“We are actually clean-sheeting both the operating model and the organizational structure to simplify how we work,” Whitman told analysts on September 5, during the earnings call for the third quarter. “With fewer lines of business and clear strategic priorities, we have the opportunity to create an internal structure and operating model that is simpler, nimbler, and faster,” she said.
During the quarter, the company bought back $625 million of its own shares. This bought the three-quarter total to $1.94 billion, financed with borrowed money, as long-term debt rose by $2.4 billion year-over-year. During the same period, HPE booked a net loss of $180 million.
HPE shares have plunged 40% so far this year, despite the massive share buybacks (is anyone else still buying the shares?). But news of the layoffs are perking them up this morning by nearly 1%, as the company pursues its apparent goal to cut itself to zero, while taking on every more debt, which it can as long as the bond market remains in denial.
And the bond market is in denial. Even on the day bankruptcy rumors surfaced, Toys ‘R’ Us bonds were trading at over 90 cents on the dollar. Two weeks later, the company filed for bankruptcy, and the bonds collapsed below 20 cents on the dollar. The bond market just didn’t want to see it. Read… Toys ‘R’ Us Melts Down, Files for Bankruptcy, Bonds Collapse
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Meg Whitman is a train wreck.
“I’m w↓th her”
What are bonds doing?
–FDR
Remember?
I remember when Meg was running for the Governorship of California and seemed really bummed she could not simply “Buy It Now” but had to go through the full auction, er, election. I tried to dig up some of the old photos we used to share and laugh at on the Ebay discussion boards; the had a lot of “bad hair” days and really looked like a hag.
California is a Second Amendment free state so Meg Whitman is safe in destroying as many lives as she possibly can without repercussion.
So … in a Second Amendment State* we’d just …. shoot her?
Please explain your reasoning. Every state is a Second Amendment state because they’re part of the Union.
*California has a TON of recreational and competitive shooting. I think I found a new range buddy today, and I was telling him that if you’re the California champion in some shooting sport, there’s a pretty good chance you’re the national champ too. The California Rifle And Pistol Association’s magazine is almost as big as The American Rifleman.
Meg Whitman for President!
The days of wanting to work for a big long-established firm are over. You are just a number in a budget to be cut when EPS fails to impress the REAL bosses on Wall Street.
The cohort of large (Fortune 500) companies has been ever-changing since the index was invented. What makes you think it was ever “stable”? In the US,, large corporations frequently fail to keep up with changing customer demands (as well as stockholder demand), and customers go elsewhere to buy what meets their needs (otherwise we’d all be still using crappy Ericsson cell phones with Symbian OS).
If you want security, go work for Mexico’s Pemex – oops – sorry, it’s been looted by socialist government corruption
Maybe try Brazils Pertobras – oops – sorry, it too has been looted by socialist government corruption
Ok, give Venzeuala’s PDVSA a try – oops – sorry, it’s been looted by socialist government corruption
Surely Russia’s Rosneft would work – oops – sorry, it’s been stolen from its owner and turned into a government jobs-for-friend place
(Sigh) if you want security, go to work for your local DMV…
HAHAHA – Right, Chip, it’s them socialists in them there foreign countries who employ people producing useful products at profit.
Here in “Capitalist” USA no one in a ‘private’ corporation has a job because of nepotism, and every corporation that’s still around is around because they produce useful products at profit, and everyone who loses a job lost it because they weren’t productive, not because we print money & have fraudulent accounting and no-bid government contracts and rentier freeloaders.
Who needs employment producing nationalized gas when you can produce derivatives and stock buy-backs with nationalized debt! Why, all of our children are above average!
Well Chris, you’ve either just proved 160M American workers do not exist, or your analysis is…mmm…somewhat niave.
I’m going with choice #2.
Ya got another jolt coming – the world isn’t perfect, but you still have to live in it. Name a big-country system that you consider to be better.
160 mn full time jobs that can support even a single person above poverty level never mind a family do not exist. And that’s a problem in a country of 330 mn+ people with a record number of adults – nearly 95 mn – not active participants in the workforce.
Is Germany a big enough country for you? Or do you prefer life in Detroit and Stockton and Camden to life in Bielefeld and Hamburg? And why must it be a large country, shouldn’t this country with its massive natural resources be able to employ citizens doing something more useful than selling derivatives?
Famous American business adviser (cant remember name) quipped.
20 years from now if we are not careful, everything will be made outside america and we will be sitting here selling each other insurance. (Derivatives are effectively a type of insurance)
Was over 20 years ago but has turned out to be a reasonably accurate prediction. Sad thing is. American Corporates did it to America.
Not Americas competitors.
Chip – thanks for posting. I love to read your comments – pithy and to the point. Cheers – JR
As always with comments like this Chip – it isn’t a binary proposition.
Everything that isn’t naked greed and self-interest isn’t communism.
This is just the way you have been trained to think.
Oh BTW – have a look at Norway and Statoil. Norwegian people are per capita the wealthiest in the world due to their horrible, horrible nasty socialist oil company.
Chris
So what is your dollar amount for “poverty level”? How many of the 160M US jobs fail your test?
The US sells a lot more than derivatives, but I know that doesn’t fit the SJW script. BTW, I’d also strongly support requiring all derivatives be registered and traded on exchanges to ensure counter-party solvency. Barry and his band of idiots was supposed to make that happen but…somehow, like so much else, it didn’t.
You propose the German system. Fine. You do realize it’s living off the misery of the rest of the EU; just a guess, but that’s not sustainable. Ask Greece (I don’t have a lot of pity for proliferate Greece, but German mercantilism sure isn’t helping). Spending 1% GDP on military, knowing NATO will defend you, is a sweet deal.
“Spending 1% GDP on military, knowing NATO will defend you, is a sweet deal.”
Which unless the Europeans are a lot friendlier than current in the Brexit deal will come to an abrupt end.
Trade and security go hand in hand, no good trade deal, why keep British troops in the Baltic’s, or anywhere else in Europe.
Why should England, pay into NATO. To protect those who will not give you a reasonable trade deal. Or even pay their fair share of NATO.
Drunker has done the EU a great disservice by engineering the situation that lead to Brexit.
With the UE failure to control its borders, the German Far right is again in the BUINDESTAG. Again in a politically unstable situation. Put there by the FEAR of “The other ” and poor German Economic performance (At least for the man in the street).
Germans were living better than Americans before there was an EU and before reunification. Greeks work harder for fewer benefits than does most of the rest of the EU… as do Americans.
The plain fact of the matter is that German citizens including children don’t go to bed hungry, Germans don’t get systemically denied education, Germans who go to college aren’t forced into debt servitude, etc etc. Germans make appliances to build familial wealth & get 5-6 weeks paid vacation to enjoy it. Americans are milked by financial criminals to be debt slaves and lack any right to enjoy any aspect of life.
Where is the East St Louis or Baltimore or Appalachia of Germany? The fact of the matter is if you’re a German citizen & not an addict, if you behave like a reasonable citizen, you’re not reduced to serfdom so that a small number of lazy rentier crooks can never be confronted with the consequences of their own bad decisions. Sounds like a better system to me.
Best comment I’ve seen!
Mayday, mayday, we are going down ……
As long as the U.S. Government has confidence in bonds, bonds have confidence in the U.S. Government.
As long as bonds have confidence in the U.S. Government, the U.S. Government has confidence in bonds.
As long as….
Ralph Nader is right: a society built on finance is doomed.
What a crazy business model taking on more debt whilst revenues fall by 7% and losses are 180 million dollars.
It’s not a crazy business model if your business model is to make money on the stock, and your business method is to have the company buy your stock.
What’s crazy about it?
HPE shares are down 40% this year. So that business model hasn’t worked very well.
It may well be working for the executives st HPE, assuming they are being well-paid.
Cost cutting and share buy backs are a lot easier than thinking up a winning business plan. THAT can be quite hard.
In fairness, the worst decision was buying Compaq. That preceded Whitman. I guess they wanted economy of scale but PC box manufacturing is and was a worse business than HP’s other businesses.
As someone said – when a snake is eating its own tail, what does it do when it comes to the head..?
Looks like things are coming to a head for HPE, and we’re about to see the difference between real wealth and prosperity and the fake prosperity bestowed by cheap debt.
Not just for HPE but across the board.
no the worst Hp decision was Leo announcing he wanted to sell off laptops/PC’s all of a sudden
Hi dwer,
As Wolf said shares are down substantially.
Looked at the accounts, not pretty reading, most sectors of the business turnover wise are down between 10%-13%.
Looks like Meg has simply said okay revenues down 10% so we need to get rid of 10% of staff.
Interesting one reading the accounts is a co called Everett who paid 3bn dollar dividend to HPE but did it by raising 3bn debt.
Interesting one where it has 27 billion dollars of goodwill on their balance sheet presumably on businesses they have overpaid for and are seeing reducing incomes on.
Buying Compaq at that time wasn’t necessarily bad in and of itself since both Compaq and HP were heavily into the desktop computer hardware business. But Dell ate them both for lunch and turned it into a commodity business, which combined with Carly Fiorina’s inept running of the company really sunk it.
Having eaten Compaq, HP proceeded to destroy both the Compaq and its own share of the consumer laptop market. With is arrogant “not our fault,its not warranty, attitude” to the graphic card solder failure in it consumer and small business laptop lines that occurred soon after.
There are still piles of HP/Compaq laptops lying wherever with this fault. People became so frustrated with the warranty denials, they simply threw them into corners. Not even bothering to send them to have the plastic in them recycled. At least apple ones are mostly made from Metal.
Apple did not so well with it, for customer relations when it recently had a similar issue. But it did do much more than HP/Compaq which basically denied all liability.
HP consumer sales never have ,and never will, recover from that “Warranty denial disaster”.
It might work pretty good if one is also holding CDS on the bonds. In an offshore vehicle.
Maybe the CEBOs will finally take off this time?
http://www.investopedia.com/articles/active-trading/032814/how-credit-event-binary-options-can-protect-you-credit-crisis.asp
As long as the senior execs get big bonuses, it’s a success!
Yep. And these are BIG bonuses too. Like $45mil/yr for Ginni with IBM, and Meg is in the same ballpark. IBM’s business has already tanked down to a non-describable “just look busy” thing. As does Meg, Ginni buys back $billions of her own stock also.
Only in today’s corrupt business times can a commercial entity produce and perform at 0%, but stays in business because they wire $billions to New York and Washington every month. Never understood how that could work
HPE reads Helping People Exit
Will be interesting to see what will happen when all the debt HPE and other companies have aquired for buybacks is due to be paid back especially as the Fed seems to be serious ….
Meg won’t care … Nothing succeeds like failure in her world.
HPE’s problem appears to be the leadership of Meg Whitman.
“Over at HP Inc., CEO Dion Weisler has managed to streamline operations while identifying promising new markets. On his last call with analysts, Weisler touted his quarter, calling it a “breakthrough.” The company delivered growth in both sides of the business for the first time in more than five years. “Clearly the separation has been positive for us,” Enrique Lores, president of HP Inc.’s Imaging, Printing and Solutions business, said in an interview.” http://fortune.com/2017/08/22/hp-printer-business-surprises/
We’ve always just been numbers at companies, with pensions we were bigger longer term numbers but still….
The advantage of working at a big company generally is still stability. You can be 99.9% sure they will have money to pay you and severnce money to pay you in a layoff.
That certainty drops pretty dramatically at a startup. But neither is likely to offer a job for life.
How did they suddenly find out that they never needed those 5,000 people? What happened last year or the year before that they thought they needed them?
What happened is they decided to lay off 5,000 American employees and replace them with low paid people in Bulgaria and Argentina.
Also in 6 months, HPE will be clamoring for more H1-b visas because they can’t find any qualified Americans to hire.
And those Bulgarians and Argentines will be thrilled to have a job But anyway Globalization isn’t always pleasant right Why isn’t the Donald on this?
I checked on HPE’s H1-b visa numbers as I was writing the article, and they are in the 200-300 range per year, so relatively small.
However, I’m not sure if they’re using a service like Infosys where the H1-b visa holders are actually not working for HPE but for Infosys. I’m not sure that the data on HPE that I have access to would pick up these Infosys employees that work at HPE (if any).
They’re probably using IBM, but that should not make any difference as far as H1-b visas are concerned.
Guys, since you’re aware that senior management has so many tricks up their sleeves in manipulating their share prices to the external public (such as share buybacks and revenue-recognition plays etc.); don’t you think they too have a whole bag of tricks to manage their workforce and payroll internally?
And I’m speaking with insider experience here….having worked in the iconic HP many years back (long before the split into HPE and HPQ). H1-b visas are just a side-issue for the Fortune 500 companies.
Fyi, one of the ways we (or rather they now) use to manage their employee numbers is to “make use” (literally and figuratively) of temporary and contract staff. The technical term is “non-exempt” employees.
Meaning they are supposed to be getting overtime pay and or other requirements for shift-work during ungodly hours or over weekends etc. However, as you would expect these are the folks at the bottom of the food-chain with no employee rights and no medical benefits whatsoever and they rarely get any overtime pay by the hour regardless of what the local labor law says. I can tell you these “non-exempt” staff does the same work as the regular HP employees but they are on much lower salary scales too. Their security badges are orange-colored too, to differentiate this “species” from the white badges of regular employees, much like how Hitler made a certain class of people wear armbands to identify them.
In the overall Dilbert-esque scheme of HR, they do NOT count as employees under HP, because they are officially outsourced/in-sourced/best-shored (or whatever corporate jargon you prefer), via external sub-contractor companies that supports the variable workforce needs of the greater listed entity. I’ve been to UK HP offices where more than 60% of the workers on-site were these “orange-badged” staff. Obviously, these do not appear in the reported numbers of employees held.
Just one case in point here: https://www.cnet.com/news/hp-accused-of-labor-violations-cover-up/
Plus the fact that these sad folks can be let of off at any time without compensation whatsoever, because they are strictly-speaking, under the employment contract of some other human resource company and HP is merely “borrowing” them at a negotiated hourly rate. In fact, I even know of formerly HP employees who officially resigned from HP and setup an outsourcing company just to service HP with regards to such labor arrangements. Of course, his newly setup company will magically appear in HP’s “approved” vendor list….you get the picture….Collusion for monetary gain happens with Big Tech, just as with rate-rigging, LIBOR rigging etc. within the Big Banks.
To be fair, HP WAS a GREAT company in its earlier years and was a classic management case study in great management and respect for employees under the founders original philosophy. In fact, they were the template for much of later Silicon valley entrepreneurship and starting out from scratch in “The Garage” and making great products with great people. Alas, once Bill and Dave passed away…their vision got eroded by all the later CEOs with fat cat executive compensation and severance packages worth a lottery win.
This capitalist game is rigged and choke full of cheaters everywhere if you just look hard enough. That’s why I often lean towards systems where replacing central authorities with egalitarian ones. Any centralized authority grown large enough will become corrupted with time.
Thanks for sharing your HP insights and experiences!
Layoffs are the first choice of lazy and poor management. Innovation requires hard decisions and effort. You can also fail actually attempting to do something hard.
Layoffs are always successful in eliminating costs.
Rampant acquisitions at stupid prices is the second choice of the arrogant and incompetent. It’s Management Theater — “We can’t run our business so let’s give the illusion of doing something dynamic while flushing money down the toilet”.
Honesty when will hollowing companies will be declared illegal?
Lenovo includes spyware, HP is disappearing… what laptop should I buy next? For now I just formatted my Lenovo hard drive and did a really fresh install of Windows.
Buy a laptop from System76 in Colorado. It comes loaded with Ubuntu 16.04 operating system. Drop Windows.
What’s this? A laptop that’s made in the USA? I thought that Americans couldn’t do that kind of work anymore.
(Sarcasm off.)
Dell makes a decent laptop; dunno if they include spyware, though.
You can install Chrome if you want spyware. It’s free :-]
Are Android phones spyware too? Or can you shut off the creepy features?
Just wondering. I’m in the market for a smart phone and they all look iffy from a security stand point.
I found the below link after your comment. Terrifying!
https://www.brad-x.com/2013/08/04/google-chrome-is-spyware/
For the win!
Both HP and Dell make fine computers if you stay with the business lines, avoid consumer models which are made with lower quality components.
Ubuntu has grown up and is an excellent choice for an operating system.
Google(and Facebook) software has aged into a creepy bug filled mess.
It will be declared illegal when employment enjoys a higher level of Constitutional scrutiny than minimum scrutiny. Don’t understand much about the country in which you are living, do you?
“In June, she announced a three-year plan, the HPE Next initiative, to cut costs by $1.5 billion……..These layoffs are part of a separate plan to slash costs in the second half by $200 million to $300 million.”
My guess is that HPE will announce share buybacks of $200 to $300 million in the second half, and buybacks of $1.5 billion over the next three years in connection with this plan.
In the same timeframe as the layoff announcement, HPE announces deal to acquire Cloud Technologies Partners. CTP was founded in 2010… as Meg tries to buy relevance today, past innovation (overlooked, deprioritized, poorly executed??) could have created organically retrained professionals and organic revenue growth.
Same with the recent SUSE acquisition…. A UNIX pioneer, HP pays a late to the game premium to stay relevant in the server OS space .
If you can’t beat them, buy them, and then believe you have changed corporate culture enough to not destroy bought value.
This. HPE bought Nimble earlier this year and you can feel the cultural rot starting to set in.
—We are actually clean-sheeting both the operating model and the organizational structure to simplify how we work,—-
anyone, particularly a CEO, who talks in corporate-speak jargon needs to be called out for the hacks that they are
Agreed Penfold it does my head in when people start talking corporate.
It normally means I don’t know what im talking about but at least it sounds good.
Does clean sheeting mean the business is in a mess lol?
and to add to the farce, someone wants Meg to be our first female president.
https://finance.yahoo.com/news/hpe-meg-whitman-won-t-103011500.html
HPE’s Meg Whitman Won’t Be Uber’s CEO. But She Could Be the First Female President
[Fortune]
Jen Wieczner
FortuneSeptember 22, 2017
“I’m w↓th her”
my comment above applies here as well hehe
They’ve been saying this since 2008, before she ran for governor of California. The governorship of Cali was going to be her spring board. Reagan did it before her. When she got trounced — by a wide margin of 54% to 41% — after wasting $140 million of her own money, those dreams disappeared. Her years of corporate cost-cutting and job-slashing have made her toxic for a Presidential run, I’d think. If you’re rich, you should at least be a “job creator,” not a “job destroyer.”
I’m actually surprised those dreams are being trotted out again.
IMHO:
Actually, the timing is pretty apt. I say this in light of the recent surge by many countries to replace the US dollar for oil purchases and other trading goods. If the US dollar loses its reserve currency status it will perfect timing for a Meg Whitman to arrive as President. That is, if the Bankruptcy boy doesn’t beat her to it. :-)
In the news this month, mentioned are a few hundred billion here and there to pay for 3 hurricane disastors still unfolding. There is a new military spending bill for a paltry 700 billion, as well as for a few ongoing wars, and a possible future conflagration in/with NK. Plus, with a structural budget defecit made only possible with printing press overtime, what could possibly go wrong. It seems just right for Meg Whitman to run for office. Tailor made….
Love reading your posts, Paulo, but I’m with Wolf: Governing is NOT the same as running a business. Otherwise old coots and other useless eaters like us would have been cast to the curb long ago, lol.
Clearly we’re in grave danger with the Rs in total control, but thankfully, so far, they appear to be the dog that caught the bus: totally incompetent, especially their preznint.
CEOs like Whitman are toxic. And will be even more so when the current failed CEO running the country is turned out, however that occurs.
On Monday 18 September, the Senate passed H.R.2018, 89 to 8. This is the NDAA for fiscal year 2018, and though the military spending is $700B, overall the true costs, which are largely hidden, will be over $1T.
Once again, Congress has used the Bill of Rights to wipe its backside in the name of “The War on Terror”.
not voting:
Graham R-SC
Rubio R-FL
Menedenez D-NJ
NAY:
Leahy D-VT
Paul R-KY
Sanders I-VT
Gilbrand D-NY
Wydon D-OR
Corker R-TN
Merkley D-OR
Leer R-UT https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=115&session=1&vote=00199
Meg has about as much chance of becoming President as Carly Fiorina.
(Has totaled 3 cars in the past 3 months…) “Hey buddy can I borrow your car?
Exactly. Just ask Mitt Romney what job slashing did to his presidential aspirations.
“I’m actually surprised those dreams are being trotted out again.”
Apart from “bernie (the communist( sanders” who else does America have?
Hence many ugly old dreams, will be trotted out in the next few month’s.
Hopefully they will all be rejected.
Oprah(tm)! If the dims wanna win, run Oprah!
– might backfire since Oprah is not beholden to anyone being independently wealthy and all.
They’re rerunning the Carly Failorina product launch, and it won’t work any better this time around.
Okay, HP Inc still sells computers and printers. The article doesn’t give me a single glimmer of what HPE is selling. Meg says she’s creating an internal structure. It will be simpler, nimbler, and faster at doing WHAT? Her blab is all inward-directed and makes no attempt to define the services her company is offering. Why buy from HPE? “We have a new and improved operating model!”
Sorry, should have mentioned it: cloud services, hardware, and software; servers, storage, networking equipment, integrated systems, and software; consulting; services such as operational support; and financial services (IT financing, etc).
I’m going to add this to the article.
Isn’t the world awash in this crap? I mean it’s like cars. There comes a point where the finite needs of the economy are disconnected from the infinite growth these companies expect. It’s just stupid.
I work in the steel industry and our internet is pathetically slow. We were quoted a $100K price tag to run a fiber optic cable into our admin building. Years ago we were making millions a month. We barely make half a million these months. The economy is not at all what people think it is. Companies like HP produce hardly nothing of value anymore. Who needs to buy software, servers, storage and all that crap when there is no growth, people are buying more shit, more businesses aren’t opening or growing. It’s all recycled paper and endless money printing fueling everything.
“Isn’t the world awash in this crap?”
Yes. That’s part of the problem for Big Tech. Much of their bread and butter has been commoditized.
I work in the datacenter side of things and still see some HP hardware. Their stuff isn’t that bad, the service line descends from Compaq hardware. Still see a lot more SuperMicro and Dell.
HP bought EDS who has some VERY big gov’t contracts. I’d guess they still have the NMCI contract.
HPE Proliant servers are solid workhorses, descended from Compaq product lines. Of course the manufacturing and a lot of the engineering is outsourced to Asian companies. But between virtualization and cloud, customers like me are buying a lot less hardware than they used to.
Sure, cloud provider server farms need hardware too but it’s like fleet sales for cars, a few big players buying large volumes while driving a very hard bargain on pricing.
Blowing 10B for Autonomy and then writing it off couldn’t have helped. Oh , but that was the idea of the previous CEO. However, Meg Whitman was on the board, and 10B is no peanuts.
Lawsuits are so exciting compare to making boring printers. Just search for “HP lawsuit”, and you will get an idea of where the silverware went.
Since the social media waporware is already a crowded space, maybe HP can be transformed to a Wall Street casino operation.
I wonder if this is preemptive to the FED reducing it’s balance sheet. Are they worried about the carrying cost of all the debt they incurred.
I guess if they were that proactive they would have been taking innovation risks instead of buying back stocks….nevermind.
HP focused on the hardware business for too long and are no longer really preferred for their products. They failed to innovate and get into the app development space. They should be out building server farms for our Instagram pictures instead of building mediocre laptops and printers.
They went into the trap of building products by just integrating “COTS building blocks” and making the profit on “services”. Those being HP-finance and licenses for stuff like HP ILO and annual “service fees”.
Problem is, The Asian “beige box builders” can do that block-integration trick too, except at better prices because they have much more volume (being the OEM-suppliers of many “brand name” products).
“The Market” doesn’t care all that much for services – and HP having lost their former edge in design and manufacture, they are now losing markets to the Asians, who do know how to scale out production.
I normally crap on other people’s products but recently picked up a HP Elitedesk G2 from eBay to replace my old Windows XP desktop (running XP/10 virtualized under Linux.) Thinner metal than earlier generations but still a pretty cool little box. Happy at the price I paid ($225 shipped.)
My HP server that I have co-located in a datacenter has been solid, except i replaced all the hard drives with WD RED disks and I think there is a bit of vendor lock in on the RAID card’s ability to detect failing disks. So slight pain but the quality is better than the lower grade Supermicro machines. But yes, you can engineer around that.
HP large format inkjet printers, I like them quite a bit. Sexy machines!
HP has some value.
My company recently gave me an EliteBook 725 G4. It’s a corporate-focused laptop costing around $1,000. The G4 version was released a few months back. The first unit had a malfunction in it. The replacement unit works fine, however this is by far the loudest laptop (fan noise-wise) I have ever used. Both units were this way and a highly respected review site also described the noise emanating out of this laptop (and its Intel-powered variant cousin) as ‘absurd’. The fact that HP thougt that it’s reasonable to put out such a product on the corporate market tells me that this company is doomed.
The HP business hardware is generally good. The consumer product side is crap.
HP tried multiple times to buy their way into the application development space. For example, their $487 Million purchase of bluestone in 2001. Bluestone sold a web application server. However, unlike BEA and JBoss, HP failed to capitalize on the transformation opportunity. Or the dip your toe in the water 2003 Talking Blocks acquisition with no follow up to procure or organically develop XML gateway technology (now API gateways).
Does anybody else get the impression that Wall St. is liquidating the US economy for short-term financial gain? Does it make you suspect the GDP numbers and other statistics are gamed to hide it?
They wouldn’t do that, would they? Why, that would be wrong.
The tech job market in California is far worse than we are lead to believe. When our company, which is a small company, posts a tech job, we get huge number of resumes. I remember in the past when we posted jobs, we would get at best a dozen good resumes. Now, we are getting hundreds for each job. On top of that we getting spammed daily by hundreds of Indian recruiters to provide us candidates.
What county is the company in, if I may ask?
We are located in Santa Clara county.
That’s what I figured from what you said. Santa Clara is the county in the Bay Area where employment growth for the past 12 month is actually negative. Which means that Santa Clara county lost jobs over the past 12 months starting in June… not many… not enough to make a huge difference. But the big thing is that the boom in job creation is over, and people are still arriving, trying to get a job.
In the overall Bay Area, a similar scenario is playing out, but only Santa Clara and Marin had negative job “growth” for the 12-month period.
This chart shows the rolling 12 month totals in job creation. Note the boom, and how it tapered off, and how, starting in June it has become a very slight employment decline. The data is not seasonally adjusted.
Interesting TH.
While touring open houses in Fremont, I see most prospective buyers who work in the South Bay.
BTW, despite great regards for Wolf, houses in Fremont are still selling 80-100K over asking and a million is now the entry price.
Are we at the top? Are we there yet :)
Separately, does anyone here want to postulate that iPhone 7 was peak iPhone? And that iPhone 8 and the later releasing iPhone X mark the end of the iPhone craze? Could it be a barometer of the return to sanity? And precipitate an overall decline in SV stupidity?
Wolf Richter
I understand the negative job growth, but I believe this is much bigger than just a bit of negative job growth. I’ve been with the company since 2005, and I don’t think even in 2009-2010 period we were getting these many resumes.
With your boots-on-the-ground experience, you may have advance knowledge that we haven’t seen fully reflected in the data yet. Good to know.
Summer employment data is always squirrely because interns show up to work in large numbers and then they’re leaving, and teachers are leaving and then they’re returning, etc. So fall data should give us a clearer picture.
That’s Wolfie for ya …. showing in hard figures what we here in Silicon Valley know is happening, we can feel it in our guts, but he’s got charts’n’graphs.
@Truth Hurts With respect to Wolf’s comments and yours, it’s not just the little bit of negative growth that’s showed up now but (and perhaps more importantly at this point) the clearly-declining trend of job gains that’s been happening since late 2014.
Alex, Wolf has no bias and is just after the truth, not rumors; so he depends on stats, data, and charts.
But the problem is that if most stats, and data are lies, then your chart end up being a lie as well. “Figures don’t lie, but liars do figure.” And these days liars are a dime a dozen.
R2D2 – Exactly my point. Actual hard data will always triumph over gut-feeling, but for a lot of people, the gut-feeling is there, too.
It’s getting cray-cray out there. I carry pepper spray. I’ve not had to pull it out for years on end. Today/tonight, I had to pull it out 3X, the third involving the manager of the Safeway downtown actually getting out an aluminum baseball bat, talking with the cops, and he and the head manager having me go into the back, employee-only area. He and she could not get the nut job to leave the Safeway so ultimately the head manager said she’d distract the guy while I walk out the door – I walked to the bus/light rail stop there, hopped on the first light rail and was outta there.
You’re not chicken to not want to play whoopass with street crazies. They’re nuts, filthy, probably carry hepatitus and every venereal disease out there, and don’t brush. Besides, they carry knives and stuff.
I might want to upgrade from my well-worn large-ish Sabre pepper spray to the Kimber Pepper Blaster I bought a while back; the idea being to have two, one in each jacket pocket – read up on this excellent product and especially note the high accolades from joggers.
I also almost lost my bike a few days ago; the thief got 3/4’s of the way through my 3/8″ braided cable, right in front of the new Sprouts market. The area is high-crime and more than one Sprouts employee has had their car broken into. I got a large ABUS chain and a 5/8″ braided cable from Amazon; I’ll see which I like more and send back the other. I think the chain’s gonna win out because large as it is, it’s “slinky” and easier to put into my pannier top bag than the large cable which is very stiff.
I’m beginning to wonder if despair and violence are indeed trickle-down. I can’t give you guys a view of Silicon Valley through the windows of a Tesla but I can sure tell you how it is for at least half of us.
Alex in San Jose…
TESTIFY, Brother!!!!
i’ve been checking in here as i can but Wolf’s site has been where i check my own guts, too. i can’t trust my own rage terror and “feelings.” this is TOO big and i’ve never seen or heard of ANY of this before. sci fi doesn’t even match the absurdity of this reality on so many levels. i’ve no WORDS. i’m still speechless. relatively. i’ve canceled a lot of “replies” i’ve written on here as i just don’t have the TIME and attention to follow up or keep up here right now. but i HAD to scream “AMEN!!!” to all you say.
i, too, am feeling like we’re at another level of “uh oh,” and just had a usually well-composed trainer at the gym interrupt my stretching in front of everyone, to cry with me about all he can’t take that’s going on in the world right now. all i could do was look him in the eyes as he cried and hug him and tell him he could relax INTO the hug and not twitch away from me politely after the usual five seconds.
right now i need to seek out responses to Wolf’s articles, from you and Petunia. you guys are my touchstones to reality in this twilight zone crazy foggy blurry b.s.
however, Alex… you feed the fearful stereotypes of the unwashed masses. because on MY side, as the unwashed mass, i’ll tell you that rich white folks/or folks who think they’re generically white are just as feral and fucked up as the ones you’re watching for on the street. another two-fisted approach needed to watch your back.
i fear street and po’ folks WAY less than “regular people” who believe in this system, do even moderately WELL in such a system, and think things are just a few tweaks tucks and nicks here and there.
like vonnegut said i think in slaughterhouse five, you’ve gotta wonder what the survivors actually and truly DID to survive.
as one of the other commenters said earlier of the ability to “other” orange-badge people… it’s the WORLD and how capitalism of many hundreds of years can justify decimating lives and the earth (same thing).
so we ARE now these street people others fear, Alex. once you start thinking of your car as a real place to live, you know the music has stopped and your escalator has ground to a half from all the urine of people who have nowhere legit to pee.
no one gets off scot free. there is no mars in such thinking.
no smoking section. blah blah blah…
(smile)
x
Kitten – I feel honored to get a reply from you.
I’ve been more “street” than I am now; I’ve been a panhandler. This was in 08/early 09. I had to tell myself I’m Studs Terkel and was investigating the state of the nation’s spare change.
Indeed, the lower-class people were the most generous. There are a ton of people out there living in their cars, etc., who don’t look homeless. The obviously homeless are maybe 10% of the total.
The “suits”, the squares, the well-off, are by and large a bunch of hateful bastards, and even when one of ’em peeled off say $40 to give me, it wasn’t about generosity, but about proving their point: Learn to fuck over the little guy like me, and you too can be rich.
As I’ve mentioned in these pages, I’ve lived on a “survivalist compound” and the guy who owned it would qualify as upper middle class, owning 5 acres and making over $100k, and I heard more plans for assassinating poor folks, eating them, bushwhacking (this means shooting unbeknownst from behind) women, children, the old, the lame… than I cared to stomach.
The grapes of wrath, man, the grapes of wrath.
Looking back, I think the 3 bad actors I ran into last night were simply batshit crazy, and “gaudy” but for the most part harmless.
Just more examples and reasons to avoid the USA – the land of ‘opportunity’.
Given me Japan any day – Oh they have their crazies once in a while and the other stuff, but nothing like in the USA.
Australia – we are becoming like the USA more every day. Drugs and gangs and imports from certain countries.
Maybe in twenty years the new imports will have ‘settled’ down and integrated, but given what I’ve seen so far around here I doubt it.
When I worked for the police the most common family name in the crime database was a Vietnamese surname – care to guess which one?
Now I’d guess that isn’t the case.
“When I worked for the police the most common family name in the crime database was a Vietnamese surname – care to guess which one?”
That would have been in the days of Vietnamta, For a while before they integrated slightly, Viets are not great integrators/assimilators naturally. Particularly as many of them were in fact chinese Vietnamese.
Things have moved on, these days they top lines in that database are taken by Lebanese or other middle eastern extraction names. They seem to be retaining the position, as most of them do not make any attempt to engage in tax paying work let alone integrate with or assimilate any of the host nation culture.
Pauline Hanson is not a nice person. However. Her Burka action, was, and did, make a very important point.
Sorry for the double reply since I can’t edit my last post.
(Wolf can you please enable edits?)
Now that London is revoking Uber’s licenses – might smaller municipalities have the guts to do the same (unless they get bribed or improperly influenced). Once that happens while Softbank may get a discounted price on Uber, will Uber survive?
To add- if the Feds cut Tesla subsidy will CA’s match compensate ?
Is this the beginning of a train wreck?
In my area they just started Ubereats food delivery. So they are branching out away from just taxi service. I don’t know what it costs to have food delivered, but I’ll bet I can’t afford it.
I’ve been saying that for a while. Earlier this month, I was planning to switch jobs. Once I saw how bad it is, I changed my mind. I might not be getting paid what I think I’m worth, but at least I’m getting paid.
In interviews, I was being asked to write really difficult coding questions like write a merge sort program, and I was doing it; but I still wasn’t getting any offers. I used to get 4-5 offers and play employers against each others to get the highest hourly rate. Now, zero zip zilch nada; so, I decided to stay where I am for now.
I don’t know if this is the situation in only Bay area or it’s the whole country.
If all they are asking you is merge sort and binary search, you are getting off easy. The in thing now a days is to ask dynamic programming questions such as longest increasing subsequence. Most interviewees just search for the questions, get the solutions by rote, and answer dutifully even as the interviewer pretends to have figured out the questions on the fly. It is all a kabuki.
This whole textbook interview thing happens when you have fresh out of school grads running the place. All they know are what they learnt in school. This is not to say algorithms don’t have their place. The dynamic programming fad started ever since amazon stuffed its interviews with those type of questions. I can understand why amazon needs dynamic programming. Did you know that they don’t organize their goods in warehouse in neat silos, but instead just put objects together in a bin. So you find cameras with shoes in the same box if they have figured out that these things are likely to be ordered together. That is their heuristics based solution for NP hard problems. I fail to see how most need that kind of problems.
There was this fellow from airbnb who was an English major. He wanted a s/w job because he saw his friends making a lot of money. So he bought books such as that by Laakman, learnt everything by rote, figured that busy engineers won’t have time to go look for new questions, and got into airbnb. He is very honest about it too.
I have heard similar experiences from others in interviews. The reason they never get back is because of their biases. If the interview is bad, they ask you to leave. So the end result is based on intangibles.
Recruiters are still reaching out though. I didn’t know how badly the pipeline is clogged up though.
Those were examples since I don’t want to make it technical here; but I’ve been asked stuff like find the longest substring in a string that is made from n unique characters, or accumulate 0’s, 1’s, 2’s in an array next to each other, or checking if a tree is a sum tree, etc.
As for recruiters, given they are not placing anyone due to extremely hard interviews, they are getting hungrier and hungrier. I get around 500 emails a day from recruiters, but that’s a sign of their desperation. Also, it is of no use to get emails from recruiters, if companies are all waiting for Euler, Perelman, Gauss, Einstein, Descartes, and al-Khwarizmi to come and beg for jobs.
I doubt any English teacher can pass such interviews by reading a few algorithm books; you need vast amount of knowledge. He might have gotten lucky in 2012, 2013 when it was much easier, or in many cases, they might have some insiders looking after them. Do you think if it wasn’t because of insiders, many of these Indian women would have been hired?
My friend interviewed at AirBnB and said it was horrible. It was all chinese guys or something that just asked him textbook programming questions and didn’t ask a single thing about creative problem solving. He said if he was offered a job he wouldn’t have taken it.
When there are a lot of applicants, then companies can afford to be choosy. Given what you say, and what I see with the number of resumes per job we receive, it is obvious that there are a large number unemployed software developers. That tells you how much of a lie the 4% unemployment rate is since the unemployment amongst tech workers is supposed to be 1% or 2% I think.
Do you think if that was the case, companies could be that choosy in hiring techies?
Yup. These days one often have a 3-ring recruitment, circus: first the search & selection plonkers, then “HR”, then the actual people offering the job.
At my place we didn’t get any decent candidates at all with this, so now we do HR+”us”, the people offering the job. We do the expert questions, HR the “human” ones. Then we fire the bad ones quickly, after 6 months.
So far I managed to get really good candidates.
I think if one overthink the selection process, one exclude too many of those quirky people who will actually perform well.
After all, we are not having their children, it’s just work!!
I will agree she fits right in and no longer qualifies for benefit of the doubt (benefit revoked).
Meg Whitman ran HP into the ground. Next she’ll want to set her sights higher and run the country into the ground. Meg for President! She’s not just another pretty face!
Wrong. This bride of chucky wench is just finishing off what was left after Carly Fiorina, another diversity hire/failure.
Yes, business in general in this area is in decline but both of them did weapons-grade stupid moves, like just about every other F500 company that has been around more than a decade and makes something other than unicorn vaporware and is funded by VC vultures.
Before Fiorina, HP was a decent company that had impressive R&D and made products of outstandingly high quality. This goes to show that you cannot have technically clueless “females” (I want to use another word here, but won’t) who are just very good at office politics being put in charge of technical areas. I might also mention the the technically clueless “female” that oversaw the Equifax breach (and got shown the door quick smart). I have worked in tech areas for many years and have yet to find a technically competent female “boss” type figure. I am also somehow remembering another technically clueless “female” [proven] fraud at Theranos. The females that make it to the top, do so by being bigger bitches than anyone else, and also by walking all over their (far more capable) female “sisterhood” as well (where a competent male would stand up for himself and not take that crap). There are some very capable females out there but somehow the battleaxes always seem to win out over them. At HP, the founders were interested in the technology, not the office politics or in proving that they could grow bigger balls by out-bitching the rest.
Women who rise to the top of large corporations usually have powerful people pushing them up. It has nothing to do with ability and everything to do with access to the power they will yield. Fiorina likes to push the myth that she rose from secretary to CEO, but the reality is that her father was a judge with powerful friends. She is a smart woman, but the wrong person to run a technical company.
Marissa Mayers also had powerful people pushing for and against her, but she was able to leverage her “relationships” into a CEO spot.
Although nobody says it, it is also clear, that women are given top jobs only when a company is in a downward slide, when none of the top men there want to take responsibility for the bad choices already taking hold. To misstate a good JFK quote, success has many fathers, failure is an orphan(or now a woman’s problem).
William Smith,
Replace “females” with “males” and you’d have a LOT more and better examples of the type of corporate management ineptitude and fraud you describe. US corporate history is packed with males who have run their companies into the ground and that have committed fraud. For example, ALL the CEOs at the big banks when they blew up during the financial crisis were male. Everyone at the top of Enron was male. Just about ever single bankruptcy described on this site happened under a male CEO.
All kinds of tech startups run by males fell apart recently. A few of them have been discussed here, including Jawbone.
Sure some people have had bad experiences with female managers, but there are endless horror stories about male managers, including in tech.
The only thing your cherry-picked examples about “female” CEOs show is your bias.
I’d say that I get a deal more value per hour and per EUR too, from my female engineers!
The techie women are all more conscientious and thorough than the men are and at least equally smart. I’d hire more if I could find more!
Just because Bernie Maddoff was running a ponzi and Alan Greenspan is an idiot I don’t think one can conclude that all men are crooks and idiots?
I find it funny, sad, how you will approve continuous comments such as “Bankruptcy boy”, “Orange ________”, etc., but you won’t approve my “I’m w↓th her” which touches on:
her support of Hillary and comments against Trump + her $/job losses mentioned here + how others think she’s Presidential material + my cute arrow pointing down instead of “forward” like that of you-know-who.
If you can’t beat ’em, censor ’em!
Don’t worry. It’s approved. I was out swimming in the Bay, that’s all. Got back to work and released the comment.
I no longer approve “orange” anything… but I don’t catch them all.
“Don’t slag the blogger” is a cardinal rule of poster etiquette. Stop your whinging, Carlada. It’s bad form.
I brought it up because I saw other comments and site owner’s replies to them long after I wrote my 3-word comment. I suspected that I was censored so I left my opinion on that, right or wrong.
P.S. It’s ironic you say “Don’t slag…stop whinging…bad” while doing it yourself. I’ll leave my judgment (and advice) on that offline.
Carlada,
Actually I thought the arrow was kind of cute… and it put a smile on my face.
“If you can’t beat ’em, censor ’em!”
I’m used to getting my comments deleted. I’m a cynical old fossil in a wheelchair with an oxygen bottle, which comes in handy when I accidentally suck all the air out of a room, and besides, it is in the nature of us Kassandras to be rejected.
Mostly I feel sorry for myself because I can’t get anybody to do it for me. I guess I’m just lucky our gracious host is willing to indulge me so long as I don’t get too out of line.
pass the o2, old-timer! :) you say Kassandra, i say Jeremiah ;)
Just don’t make me live in the attic. There’s no AC and my bucket of fish heads won’t keep.
the attic looks more and more appealing to me as the years go on!
Smells like a Tony Soprano “bust out” at the Fortune 500 level.
I am no fan of Meg Whitman. That said, it looks like she’s doing whatever she can to clean house. There’s a lot of deadwood in middle management positions in these corporations. They are mostly due to who knows whom. She is now pulling the hair out of the drain (pardon the expression) and a lot of strands that wer there only because one hair knew another, are coming out. So the next time she wants a list of employees to lay off, I am guessing, the ones that are now pariah are put on the list.
Also, when she decided to take over, it was not that she was desperately unemployed. She had made a lot of money through eBay. She and Andressen were both on the board of HP and after the last fiasco with Mark Hurd (the company he purchased and the bad blood between him and her), she decided to take over. So unlike a lot of the usual CEO types who talk about seeing forest for trees and chasing the dragon crap, she’s girdled her loins and is now wading through the gunk. HP has been dying for over 2 decades now and she is only playing the coroner. Presumably, she’s also playing the midwife for a new sustainable business.
As for political aspirations, Carly was there before Meg. Until she too failed in her political ambitions. Now, Fox calls Carly for debates to make sure the stage is not full of white RINO men. Meg might yet make it to national stage.
As for a CEO who’s known to fire people on national TV ever becoming a president, man do I have a surprise for you!
As we learnt from the last election, Meg might still have a chance to be the anointed one if she plies main stream media with wine, food, and whatever else tickles their palette.
Guido
You said “I am no fan of Meg Whitman. That said, it looks like she’s doing whatever she can to clean house. There’s a lot of deadwood in middle management positions in these corporations. ”
Whitman’s been CEO for 6 years. Don’t you think it’s a little late to realize she forgot to purge deadwood? (Opinion of old retired CFO: if you have 10% deadwood, you don’t have deadwood – you have a dead tree).
If you want to see where Apple will be in 20 years take a look at HP. When founders die, so does the vision and drive. HP lasted this long because the “legacy” of the founders was large enough to carry it. Apple will be the same. All these tech companies packed with H1Bs are total write offs.
Yep Petunia, I’ve gone from an Apple loyalist to a “hater”.
I still like my HP 35s calculator, though. A lot of features of the 41C series, plus it does more stuff. Doesn’t have HP-IL networking capability but no one uses that any more, and I don’t need an IR printer. But very good for doing basic scientific work, especially since all the older guys work on 41C’s and I can match their algorithms pretty much keystroke for keystroke. And it only cost me $50 although that was a few years ago.
After my HP 12C — probably the best product HP ever created — passed on, following 34 years of loyal and trustworthy service, I bought a new HP 12C. And they still make them! It looks and feels kind of the same and cost about the same, maybe a little less….
But what I noticed was that the antediluvian display still goes only to 10 digits. Thus the highest number you can put in is 9-something billion, which in 1984 was a heck of a lot of money in the corporate world, but now it describes the valuation of a startup.
Of course, you can always use scientific notation….
I thought the 12C actually calculated to 20 or so places? And there was a way to view them all? The 12C is certainly their most enduring product. I think you should read up on your 12C because I’m convinced I read somewhere that internally, it works at 20 or so places, because in money rather than engineering the significant figures can string out that long. In engineering you get maybe 5 at most.
It calculates to God knows how many places, but the display shows only 10 numbers. And that’s all you can input, unless you switch to scientific notation.
HP 12C, as you have noted, is probably the best product that HP(founders involved) ever conceptualized. I have been a fan boy of HP business calculators since 1977 when i was fortunate to obtain a HP 22. If you want a HP calculator with more displayed digits, look for a refurbished HP 95 or 100 LX.
Apple’s grandiose new headquarters is their harbinger of doom. It’s happened many times before here in Silicon Valley.
See Borland, Sun, SGI, etc.
You can add Salesforce tower in San Francisco to that list.
Off topic, but in the area of pensions for those of you that have lived and worked in Japan in the past:
The Japanese government finally changed the pension system so that SOME foreigners can now get a Japanese pension without having to have paid in for 40 years.
Of course, there are numerous rules and restrictions:
1. You need a minimum of ten years payment, but if your country has a social security agreement with Japan you may be able to use time in your country to make up that ten years. IIRC the USA has one as does Australia and several other countries as well.
2. You can NOT have taken a partial refund of your pension payments when you left Japan. IF you did so you have lost the ability to get on this ‘gravy train’. You have to start again at zero if you go back to Japan. (Sucks for those that took the partial refund and basically have now thrown away the time over three years of payments based on the facts back then that there was no way in the world to ever get 40 years of payments and qualify. The Japanese government must have made a fortune off foreigners in that situation!!!)
3. The retirement age in Japan is still 65 so if you do qualify you can get a couple of years payment before any reduction in payments in countries that don’t allow ‘double dipping’ if your country’s retirement age is higher than 65.
4. The amount isn’t going to be much if you were covered under under the national pension system. Max payment after 40 years is a whopping Y779,300 or about US$7000 a year. More if you were covered by the other pension systems such as the Company system or University system.
5. So if you qualify I guess something is better than nothing.
SEE:
http://www.nenkin.go.jp/international/english/index.files/leaflet.pdf
And as long as we are talking about Japan a warning for those of you thinking about living and working in Japan:
The Japanese government also changed the laws regarding gift and inheritance taxes.
For many foreigners in Japan and those that have recently left Japan they may find themselves liable for paying inheritance taxes despite these assets not being in Japan or not being in Japan when something happens…….
In Japan the estate does not pay the tax, but the person getting the asset or the gift pays.
The rules depend on your visa status while in Japan and the length of time that you have lived in Japan as well as where the person getting the ‘goods’ is.
For example, if you established a residence in Japan and spent time there and then left. Unfortunately, your parents die shortly thereafter and leave you a couple of million bucks.
If your visa status in Japan and/or the length of time you’ve been in Japan or the time since you left Japan isn’t long enough, you would be taxed on the money your parents left you even though they have absolutely no connection with Japan.
You did and you’ll end up paying a big bunch of bucks to Japan as the rates there are quite high. You could use any taxes paid in your home country, but most places have lower or no ‘death taxes’ (Such as Australia) so tough luck.
For those that have Japanese spouses and lived in Japan with that kind of visa you need to be aware of these changes.
SEE:
https://www.japantimes.co.jp/community/2017/07/23/how-tos/gift-inheritance-tax-reforms-leave-japans-foreign-residents-liable/
As a result of these changes, we have decided NOT to move back to Japan.
Those rules are hard to swallow. But I guess the Japanese government needs every yen it can get, and it’s squeezing everyone it can get a hold of.
Too bad that this sort of thing gets in the way of where you want to live.
Big changes between the time we moved from Japan to Australia.
Japan was expensive and Australia was cheap. Completely different now.
Lot’s of good reasons to live in Japan, but no way I’d want either myself or my heirs to ‘write a check’ for a ridiculous amount to the Japanese government for that ‘privilege’.
I guess we’ll limit ourselves to taking more trips there over the coming years.
I do feel sorry for the ‘gaijin’ that have made Japan their home or long term residents that leave and then are going to be hit with a huge tax bill when they inherit.
All those on PR and spouse visas are subject to the new scheme regardless of how long they have been in Japan and subject to that scheme after they leave Japan as well up to a number of years.
The gift tax rates in Japan are ridiculous:
Less than 2,000,000 10％
3,000,000 15％
4,000,000 20％
6,000,000 30％
10,000,000 40％
Over 10,000,000 50％
(Of course there are some other rules and exemptions, but those rates are unreal.)
Estate exemptions IIRC are now 30 million yen and then 6 million yen per person – basically not much if you have any kind of estate.
(Net assets at the lowest rate are taxed at 15% or so up to 30 million yen.)
Plus the government now requires you to file a report if your assets exceed either 300 million yen in Japan OR if you have 50 million yen or more of assets in a foreign country or if you have 100 million yen of assets subject to tax and your income is over 20 million yen.
No thanks – need to keep life simple. (and reasonable)
If some politicians got their way we would have a confiscation act, better known as a wealth tax.
How does a person like Meg get into such a high position? I don’t think she is stupid but she isn’t much of a team player. To aggressive to make good decisions.. unless her idea of good decision is just to pad her own pocket and has no realization that how she does it is destroying the golden goose that was laying her the golden eggs.
When looking from the outside, this seems to be a common trait of the modern CEOs.. Not all but way to may of them. They are going to leave this country a hollowed out hulk when all this borrowing to manipulate stock prices comes to fruition. And it will.. it is inevitable. What can’t continue will stop..
Interesting comments about the bay area jobs.. and how house prices are still going up.. seems totally insane from the woods of Oregon
The overall business talent of the current crop of US (even global) execs seems pretty low. Very few do anything significant. The ones at the old companies with shrinking margins do what Whitman does, e.g. Sears, etc. Then there are the ones who go into private equity , get stripped, loaded with debt and set adrift for awhile (>2 years to avoid the bankruptcy laws!), and then go bankrupt.
I chuckle whenever I think of Fiorina, Emilio (AAPL), and even Welch (GE). Welch left Immelt with a stinking pile, really- and is still touted as a good businessman. No way.
The real economy has been soft since 2000, and everybody knows it. We need another recession to burn more underbrush. Debt loads are too high everywhere. It’s possible that another up cycle can happen in the real economy after that gets worked out- which will not be painless.
Because she works for Wall Street, and speculators moving big blocks of shares for short-term advantage. Being a hyperaggressive d*ckhead is considered a requirement in that milieu, not so much anywhere else. The actual business is just a vehicle to be manipulated by her corporate bullshit bingo, and it shows.
One of the substantial reasons she got there was she spent 10 years at eBay, growing it (profitably) from 30 to 15,000 people (and, oh by the way, also creating PayPal).
That’s impressive.
Unfortunately, it appears it’s not the exact skill-set to resurrect HPE.
Whatever is going on with new iPhone sales is dramatic:
1. Looks like no “super upgrade cycle” crush of iPhone 8 orders (so far…)
2. Millions of people might be seriously considering spending $1,000-1,500+ for an iPhone X
3. Maybe when a lot of people look at iPhone X (or the phone looks at them), then the wave decides to buy iPhone 8
Gonna be an interesting couple of weeks.
It’s not the “bond” market anymore, it’s the “bomb” market
Hi Wolf,
Is there a relationship between this and HP’s sale of its software side to Micro Focus? No mention of this?
This is the same meg whitman as govener of new jersey built the aquarium in camden nj one of the worst cities for crime and then wondered why no one came. I think she outdoes hilary clinton as genius of the year.
That was actually Christine Todd Whitman, who as Bush’s EPA chief told the world the air was safe at Ground Zero after 9/11, consigning hundreds of people to death by cancer.
Was crazy Rocket Man successful in blowing up internet stocks, – like AMZN, GOOGL, FB..- instead of blowing up H – bomb in the atmosphere, and shutting down everything ?
There is a lot of Man V woman executives BS going on in this tread.
Whitman Etc are simply products of the US corporate, fraudulent, so not innovative or particularly competent, executive producing machine.
These women succeed in theses companies, and get these positions, as they tick all the required, corporate fraud, hollow out the business and destroy shareholder value, in favor of the other executives, and PE, model.
Just like the Majority of other US executives, not ability. But contacts, and most importantly, SOCIAL CREDIT. Play a huge role in landing these position’s.
Big American entities, Just like the US Govt, have not promoted to senior level based on merit, for a very long time. This is before you start to consider the reduction in quality talent, caused by the Affirmative action and diversity policies, in education and employment.
Tokyo U, exam to get in, choice of jobs post grad. Once they were almost all like that.
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Of course another explanation you fail to consider (understand?) is the acceleration in business change makes certain industries harder to manage (male or female).
I love your statement “Big American entities, Just like the US Govt, have not promoted to senior level based on merit, for a very long time” – so (in your opinion) companies KNOWINGLY or DELIBERATELY promote bad people. And this is based on what analysis & experience? Do you have any experience hiring/promoting senior executives?
Whitman grew eBay from 30 to 15,000 employees in 10 years; doesn’t mean she’s a whiz at managing a tech services company (HPE) that’s been struggling for years (including before she got there).
Meg Whitman is a classic example of a psychopath. Their game is to get as many people to buy into their version of reality as possible, no matter how insane it is. And they have zero compassion for other humans. They appear human only because they have learned to mimic human emotions, and are much more talented at appearing human than the average person WHEN YOU ARE IN THE ROOM WITH THEM, because they can play ordinary people like a master can play a Stradivarius. Like a transvestite appearing female, because they have no female characteristics, their hair, their makeup, their dress, their mannerisms are all perfect and they look absolutely gorgeous. The same thing with psychopaths. What you see is not what you get, someone appearing more real than life.
You can tell when an organization is run by a psychopath, all the truly competent and talented people will start feeling like they are going crazy. They will go home at night and anguish about how they feel about their job, because nothing that is going on makes sense.
The occupations that draw the most psychopaths are corporate officers and politicians. This is common knowledge in mental health circles. While undetectable to most, anyone who has been “bitten” by close interaction or been under the direct control of a psychopath develops a radar for them and simply cannot get out of the room fast enough when one appears. They also have a very strong tendency to never speak of their experience because being under their control is a form of psychological rape, and people have a tendency to believe it must be their fault for their experience.
“You can tell when an organization is run by a psychopath, all the truly competent and talented people will start feeling like they are going crazy. They will go home at night and anguish about how they feel about their job, because nothing that is going on makes sense.
anyone who has been ‘bitten’ by close interaction or been under the direct control of a psychopath develops a radar for them and simply cannot get out of the room fast enough when one appears.”
Great comment.
Nortel Networks.
(Not BNR).
Agreed EcuadorExpat on your comments.
These people you’re on about you’re right show all the signs being psychotic, sole aim to get to the top and don’t care who gets in the way.
I’ve encountered two at least in my life, one at a FTSE 100 company (Capita) who was an absolute nut job kept ringing me up every two seconds and one at a French Car Company the guy should have been sectioned, he used to explode in rages for no reason. (which were quite funny actually).
The danger with these people is that once they get it into their head how something should be done, you won’t be able to change their train of thought and that’s dangerous for a company.
So sad, HP used to make such good equipment, the best in the field, now they sell re-badged rubbish.
I used to advise clients to buy HP, now I advise them to avoid HP.
HP is a good example of how far America has declined.
Sinbad
It’s not as bad as all that.
HP is a good example of how far HP (not America) has fallen. HP was resistant to tech change 30 years ago, then played unsuccessful catch-up, then played unsuccessful acquisitions (EDS, Compaq, etc), and god only knows what they’re playing now.
Change is good, especially if it moves deadwood & failed business plans off the main highway. It’s absolutely unrealistic to expect the legacy set of good large companies (which HP used to be, but is no more) to remain that way for more than a couple decades, especially in technology. Someday this will apply to Google & Apple.
Hi Wolf,
Hope you’re well.
A big piece of work but it would be really interesting is to see a top 50 lets say of US companies by debt divided by turnover.
Best Regards
Steve
Stevedcfc72
I think I kind of see what you’re after – does debt help or drag on turnover(?). My guess: it differs by industry, but debt generally facilitates turnover up to a limit, then it can kill the business, even if not the turnover (Toys R Us).
o How do you define “top 50” – do you mean the top 50 largest US companies? Top 50 indebted?
o How do you define “debt” – on/off balance sheet (future lease obligations, etc)? Are bonds always debt – regulators consider some bonds as bank capital…
o How do you define “turnover”?
Thanks for giving me crazy ideas. I’m now checking into corporate debt v. corporate sales v. stock market performance (all US). I already downloaded some of the data. At first glance, it looks terrible. This could be an eyeopener. I might have something up on this later today :-]
Have some Valium handy, that will be a FRIGHTENING exercise.
Charts would be mandatory in that, to enable the attention deficient readers, to easily understand the article.
Thanks Wolf,
Apologies that the accountant in me asking these questions.
I’ve seen companies who’s debt is 100% of their turnover doing quite well.
I’ve seen companies who have say 10% debt to turnover doing not so well bizarrely.
The companies I’ve worked for recently are all reducing their debts and have done by 50% plus over the last four years. They’ve increased their business through self financing of their profits which is totally the way.
What seems to be the case is the bigger the company the more bizarre they seem to act i.e share buyback through debt.
Sorry Wolf I’ll come up with more crazy ideas in the future lol.
Hi Chip Javert,
Hope you’re well.
Your questions are bang on.
Question 1 – Debt drag on turnover – that question in itself you could write a book on. Good debt I presume is for example you buy a new fixed asset which may increase turnover or reduce costs by efficiency or Bad debt which Wolf has stated such as share buyback which is lazy business.
Question 2 – Top 50 Businesses-debt – Do you know what I’ve actually assumed that every big US company will have substantial debt.
Question 3 – I don’t know but do a lot of the big companies have off balance sheet debt?
“Question 3 – I don’t know but do a lot of the big companies have off balance sheet debt?”
America is the land of legalised Corporate Fraud. If they can, they will. Many US bank’s, do .
A very common form of off-balance sheet debt are leases. This includes store leases for retailers, which are a big reason for the series of bankruptcies we’re seeing right now.
There are many other forms.
In many countries PE use lease to milk entities along with their variable “Mangment Fees” that go up according to the availability of liquidity.
Which would qualify as another OBS liability, no?
Hi Wolf,
In the UK within the financial notes of a company they have to report operating leases payable: (Property and other)
Within 1 year – Amount
1 – 5 years – Amount
5 years + – Amount
Don’t they have to do that in the US?
They report certain leases in the footnotes. But they’re not included in the liabilities on the balance sheet.
Something really weird is happening with Intel corp numbers…they have lost a significant part of the market to a much cheaper AMD (a new series of significantly cheaper and ~same performance chips has been released and it’s a bang!), they are 3-5 years behind on their tech schedule, the semiconductor industry big hope (automated cars) is 10 years away, the market is stagnant across the board…and they are writing record profits. Yes, they did lay off some 20-30,000 employees…the Oregonian published a statistic, they were majorly 45+ age. They also consolidated world operations, sites were closed and centralized. But still, how can you be making record profits, if the market is not growing, and you are losing market share day-in-day-out? Anybody an idea?
My guess: They’re charging too much for their chips, hence big profits and loss of market share.
A lot of that over charge goes ar at least use dto go to micro$oft in the Intel in side rebate scheme.
Having said taht they can not expect to keep charging the preimum thye do in this market and retain their position in it.
They are charging too much for chips. A cheap chip from Intel is over $300, with $500-$1000 being average. I’m genetically incapable of spending that much on a chip.