San Francisco, Dusseldorf Enrique Lores has only been CEO of HP since November – and possibly the last in the company’s history, which is considered the forefather of all garage start-ups. In front of the garage at 367 Addison Avenue in Palo Alto, where Bill Hewlett and David Packard developed the first electronic measuring devices, there has been a bronze sign since 1989: “Birthplace of Silicon Valley”.
1989 was also the year in which Enrique Lores began his career HP started. The electrical engineer started as an intern, never changed employers and instead worked his way up over three decades. He experienced and shaped two splits: 1999 the spin-off of the medical technology and measuring instrument business, which went public as Agilent.
And in 2015 the separation from the business customer division HPE. The business with computers, printers, scanners and software for private customers remained. At this point in time, the company no longer looked like the pioneer, but rather like the old Uropa of Silicon Valley.
When the group was split up, Lores headed the “Separation Management Office”, then he took over the business area for printers and printing solutions, where he was responsible for taking over Samsung’s printing business in 2017. When Dion Weisler left the HP chief position for personal reasons in November 2019, Lores moved to the top of the group.
It was not an easy start: Lores has to implement a billion-dollar savings program in which up to 9,000 out of 55,000 jobs worldwide are to be cut.
There was hardly any improvement in the quarterly figures that the company published on Monday after the US stock market closed: In the three months to the end of January, profit fell 16 percent year-on-year to USD 678 million. Revenue decreased nearly 1 percent to $ 14.6 billion.
struggle with Xerox and Icahn
Now Lores also has to fight for HP’s independence. Shortly after taking office, the significantly smaller printer manufacturer Xerox made a takeover offer for HP, supported by activist investor Carl Icahn, who holds shares in both companies and publicly emphasized the great savings potential of a merger. HP management at Lores has repeatedly rejected the Xerox offer as too low.
However, Xerox was not satisfied with this, the copier manufacturer secured a line of credit of $ 24 billion from several banks and increased the offer to $ 35 billion. HP is open to talking about a merger, Lores said when he first presented quarterly figures – at least if the deal created value for shareholders and contributed “to HP’s strategic and financial plan”. The manager doubts that.
The product ranges of the two companies complement each other. Xerox manufactures large printers and copiers for offices, HP products for private users. However, business has been shrinking for years: In times of digitization, less and less printing is taking place.
Lores must now convince the shareholders that his company is doing better on its own. HP has announced an extensive share buyback program: Instead of five, he plans to invest $ 15 billion to increase the price, financed with new debt.
It doesn’t sound like a great strategic idea. More like the fear of the end.
More: HP had previously resisted being taken over by rival Xerox. Now HP is open to discussions.