back to article This is your last chance, HP. There's no turning back. You take blue poison pill, the story ends. You take the red Xerox pill, you stay in Wonderland

Xerox has shot back at HP's decision to adopt a shareholder rights plan – a poison pill designed to derail the photocopier titan's $36.5bn hostile takeover of the PC'n'printer slinger. Last night, HP adopted the protective measure, engineered to make life difficult for Xerox. The rights plan states that if someone (cough cough …

  1. Joe W Silver badge

    So Xerox is lending money from a bank, which it will likely put as debt onto HP after acquiring it. Basically they are proposing to buy it with its own future debt... Let's hope they are doing a Porsche (Porsche tried to buy Volkswagen AG a few years back, a plan that eventually failed and it was VAG who bought Porsche afterwards).

    (no, I don't like Xerox nor do I like HP nowadays)

    1. bombastic bob Silver badge
      Devil

      the HP board of directors fear for their lives

      strangely, it is actually ILLEGAL to use borrowed money to buy stock [for individuals, anyway - since the Great Depression it has been so in the USA]. I have to wonder how it is that a CORPORATION can get away with doing that... maybe it's just "a loophole" ?

      HP might re-consider whether it wants Xerox as a major investor, rather than an owner, by offering a non-controlling interest in the company as a compromise, along with reasonable changes that Xerox is going to do ANYWAY. But if Xerox wants a HOSTILE takeover, it's because they're gonna fire the board of directors and everyone at super-senior management level.

      I suspect that below senior management level, people's jobs aren't "at stake" so much. Unless HP has a top-heavy staff [like IBM has had in the past], Xerox isn't going to want to shoot their own feet, and will need people to do work and make their investment profitable. What they PROBABLY want to do is steer that ship TOWARDS profitability.

      So yeah "heads will roll" but only above deck. Below deck, where the REAL work is done, I bet they HIRE PEOPLE!

      (Xerox invented the modern GUI, just worthy of mention, then Apple and Microsoft stole it, and then Apple tried to sue Microsoft over it, so Xerox coming back and buying control of HP is an interesting twist)

      1. The Man Who Fell To Earth Silver badge
        FAIL

        Re: the HP board of directors fear for their lives

        "strangely, it is actually ILLEGAL to use borrowed money to buy stock [for individuals, anyway - since the Great Depression it has been so in the USA]. I have to wonder how it is that a CORPORATION can get away with doing that... maybe it's just "a loophole" ?"

        No it's not. As an individual, it's called buying on margin if the loan comes from the broker directly. Shorting is also a form of buying on margin. I've done both in the past.

        As a corporation, it's called a Leveraged Buyout.

      2. Old-dog

        Re: the HP board of directors fear for their lives

        "Xerox invented the modern GUI, just worthy of mention, then Apple and Microsoft stole it"

        Apple pay Xerox with one millon shares for the GUI. Then improved it.

        And Microsoft... well...

      3. Doctor Syntax Silver badge

        Re: the HP board of directors fear for their lives

        "and will need people to do work and make their investment profitable"

        No. Modern management practice is to keep firing people year after year. The fact that they do the actual work is of no consequence. It cuts costs in the next quarter. The wise heads in the stock markets nod approvingly and increase the price. The execs get bonuses based on this. The is proceeds until the company is unable to function but by that time the execs have gone to spend more time with their money and everyone in the stock markets say what a dog that company was.

        There are extra bonus points for the bankers if they can catch the company, put it into administration, buy it out again, leaving its creditors to absorb the losses, load it up with even more debt (the driving force of all this for the banks is to load it up with debt and collect the interest).

        Nothing in this does any good at all for employment. Any work that has to be done will be ousourced. Expect the outsourcers to be amongst the disappointed creditors.

    2. LDS Silver badge

      It's called "leveraged buyiut"...

      ... and it's how many companies were hampered - or even destroyed - to let a few Wall Street shark make easy money without risking their own - and why many banks became saddled with "non performing loans", and derivatives to offload the risky loans to someone else.

      With low interest rates, they are even more appealing - and then often they lead to "zombie" companies, companies with so much debt they stay afloat only because the interests are low, but all the money has to be used to pay debt so little is left to grow or innovate

      IMHO, leveraged buyouts should be banned because they make very little business sense, especiially beyond a certain ratio.

      1. Tom 35 Silver badge

        Re: It's called "leveraged buyiut"...

        I used to work for a company that was the "HP". It was bought by a much smaller company that had no money, but somehow got someone to loan them many millions to buy the larger company. 2 people walked away with a few million, the company slowly sunk under the debt and many little people lost money. That and short selling should both be banned.

        1. Dave K Silver badge

          Re: It's called "leveraged buyiut"...

          Its also a similar thing that helped kill Maplin. Multiple changes of ownership - many of which placed the financial burdon for the change back onto Maplin, meaning that eventually the costs of servicing the debt - combined with a drop in sales were enough to push the company under.

          Not saying Maplin would have survived forever, but having a massive debt on your shoulders both saps your profits with interest payments, and makes the threat of insolvency uncomfortably close if the company struggles at all...

      2. Terry 6 Silver badge

        Re: It's called "leveraged buyiut"...

        If my memory serves me right this has also been used ( in the UK anyway) to buy out football clubs.

        In effect loading a massive mortgage on to the club, so that some random rich person can have a vanity project at the expense of the actual supporters. Man U comes to mind, but I may be wrong.

        1. Anonymous Coward
          Anonymous Coward

          Re: It's called "leveraged buyiut"...

          I think something similar happened to Reading too....

    3. sabroni Silver badge
      Headmaster

      re: So Xerox is lending money from a bank

      No, xerox is borrowing money from a bank. Lending is the one where you give money, borrowing is the one where you get money.

      I'll be honest, i stopped at that point. How many other words have you flipped the meaning of?

      1. Marc 13

        Re: re: So Xerox is lending money from a bank

        In certain parts of the north of England, the phrase "Can you borrow me a [xyz]?" or "Borrow me [xyz]" is perfectly acceptable in place of "Can I borrow [xyz]?" or "can you lend me [xyz]".

        m

        1. Aladdin Sane Silver badge

          Re: re: So Xerox is lending money from a bank

          It may be accepted by the common folk, but we woz learned better.

        2. Terry 6 Silver badge

          Re: re: So Xerox is lending money from a bank

          Not acceptable, or by and large accepted.

          It was wrong when i went to school* in the 70s. It's still fucking wrong.

          *North Manchester

          1. Rob Daglish

            Re: re: So Xerox is lending money from a bank

            Yes, and the phrase was North of England ya southern softie :-p

            In this part of England three hours north of Manchester and yet still not Scotland, it’s not uncommon to hear things like “Can you lend me a tenner til payday?”

  2. cornetman Silver badge

    Xerox are the poison pill. All of the equipment from Xerox that I have had to deal with over recent times has been complete and utter crap.

    I know that HP used to be the dogs testes in terms of expensive yet bullet-proof kit, their more recent stuff has been less than ideal.

    Come to think of it, perhaps they would be rather good bedfellows.

    1. bombastic bob Silver badge
      Meh

      "their more recent stuff has been less than ideal."

      agreed. up to about a decade ago I could rely on an HP printer having CUPS support as well as being reliable for its entire life. THEN I bought an 'all in one' copy/fax/printer and it doesn't work right unless I put the paper in 'just so', and hand-clean the cartridges, and the paper feeder STILL won't work properly for making a stack of copies [that last part really is a Xerox thing so maybe THEY can fix it?]

      Anyway - the all-in-one still works for my occasional printing and fax'ing and copying/scanning but I sometimes get frustrated with the overall LACK OF QUALITY in its obviously "cheapened" design.

      CUPS support is my #1 concern. "Next Printer" will have to do that, or I won't get it. Epson, you have my eye at the moment...

      1. Doctor Syntax Silver badge

        "as well as being reliable for its entire life"

        Entire life? Make that the sun going red giant.

      2. phuzz Silver badge

        The expensive HP printers still seem to have that old HP-'built like a brick shithouse' quality, but the cheaper ones are pretty worthless from what I've found.

        Rough rule of thumb, for every £100 you spend, you get an extra year of lifespan (of the HP printer obv, you can't just make yourself immortal by spending money, no matter what certain billionaires would like to believe).

  3. The Nazz Silver badge

    Bit too late?

    Chip Bergh, chairman of HP’s board of directors. He said HP remains “very concerned about Xerox’s aggressive and rushed tactics, and any process that is not based on full information is a threat to our shareholders.”

    Cough, Autonomy.

    1. macjules Silver badge

      Re: Bit too late?

      Exactly. And we would all love to see Meg arraigned on fraud charges once Xerox's auditors realise that they overpaid by $8.8Bn. Hell, I bet the QC's in London are already writing up their invoices.

      1. bombastic bob Silver badge
        Devil

        Re: Bit too late?

        Meg Whitman has been out of the loop for quite a while now... hasn't she? wikipedia said so anyway...

        (maybe she's got influence on the board of directors still?? major stockholder?)

        1. sabroni Silver badge

          Re: Bit too late?

          Misogyny never grows old.

      2. eldakka Silver badge

        Re: Bit too late?

        At least blame the right villain. It was Leo Apotheker, HP CEO between Hurd and Whitman, who is responsible for the Autonomy purchase (wikipedia):

        During Apotheker's tenure at HP the stock dropped about 40%. It dropped nearly 25% on 19 August 2011, after HP announced a number of seemingly abrupt strategic decisions: to discontinue its webOS device business (mobile phones and tablet computers), to begin planning to divest its personal computer division, and to acquire British software firm Autonomy for a significant premium

        1. Anonymous Coward
          Anonymous Coward

          Re: Bit too late?

          It was Meg (and the board) that decided to go through with it. It wasn't finalised when Leo got the boot.

          It was also Meg who then did a U-turn and split the company in the middle of an on-track 5-year recovery plan, then sold off the Autonomy remnants to OpenText and MicroFocus. The latter of course now involved in more court cases for having paid too much.

    2. RegGuy1 Silver badge

      Re: Bit too late?

      Yep. That was my first thought. Eagerly awaiting the verdict on that. From what I've seen that looks bad for HP. Tick tock...

    3. Anonymous Coward
      Anonymous Coward

      Re: Bit too late?

      The autonomy deal kerfuffle involves HPE, this is HP Ink .

      1. BebopWeBop Silver badge

        Re: Bit too late?

        And printers.

    4. bombastic bob Silver badge
      Meh

      Re: Bit too late?

      HP bought Compaq but unfortunately didn't keep up the quality.

      (my personal belief: they swallowed the Win-10-nic Koolaid too much, and it KILLED their product line, along with capacitor problems and other quality issues)

      HP's upper management staff is to blame. Period. OTHER makers (like Lenovo) have done well in the desktop and laptop business. HP could have done well, too. But they went the wrong direction (like so many others).

      Xerox seems to be doing well enough to afford a hostile takeover. So maybe it'd be a benefit to LET THEM?

      HP has Romans at the wall demanding surrender. They can try outlasting the siege, but that's unlikely to work. They can try fighyting back to the last man/woman/child but that's suicide. They can INSTEAD take a lesson from our President, and MAKE A DEAL. Then, if they play their cards right, EVERYONE will win, NOBODY will lose, and both companies continue forward in a brighter future!

      It looks like HP has chosen the 'suicide path' from what I can tell... maybe I could study this a bit more, see what Fox Business News has to say about it, read up on some other info from WSJ and others that know more than I do and are trustworthy, but at least from THIS article and my experience with HP products [and how they've slow-boiled me into never buying HP again] that the Xerox thing just might be their best bet at future profitability and actually EXISTING...

      /me has worked with HP minicomputers in the early 90's, exclusively used HP printers since the mid 90's, owned an HP laptop from 2008-ish, and my most recent "all in one" printer that has slow-boiled me but at LEAST is supported by CUPS...

      (after hitting preview I'd fix that spelling error except that the font in the edit window is SO small I can almost NOT EVEN READ IT and picking through the text to find it isn't something I wanna do right now...)

  4. PhilipN

    The PBS* always loses

    *Poor Bloody Stockholder.

    Here's the sequence when a bid comes in :

    Top priority - Executives check their terms of service and see either (1) how much they have to be paid to get lost or (2) how soon they go on the dole (welfare). No need to check the insurance cover for executive negligence since that will have been made watertight years ago,

    Second priority - Call the lawyers to introduce a poison pill which for decades the company did not need.

    Third priority - Get ready for a pitched battle in court over the poison pill. Lawyers win again.

    Fourth priority - Call your golf club buddies or anybody to act as a white knight to soak up shares from wavering stockholders at a preliminary stage of the battle (before the bidder ups its offer). Clandestine deal to buy back their shares if the bid collapses.The arbitrageurs will move in anyway whether you ask them or not. They win.

    Fifth priority - Call your main competitors (or any other company big enough to make the whole dish indigestible) to see if a quick merger or takeover may be agreed with guaranteed jobs for the executives.

    Sixth - Engage advisers to say the target company is ridiculously undervalued, They get paid.

    Seven - Dig behind the sofa to revalue assets which have been underperforming for years. Plan to write them off again after the bid fails.

    Eight - Embark on long overdue restructuring and cost-saving to diminish future prospects for a new parent company.

    Nine - Same advisers as in 6 asked to advise whether the bid is good for shareholders. Pay them. Then sack them if the answer is "yes". Engage new advisers.

    Finally step back to see if the deal is actually good for stockholders.

    Did I miss anything?

    1. Boris the Cockroach Silver badge

      Re: The PBS* always loses

      You forgot part of eight.

      Trash the R&D department to "increase profits" and to make sure the combined companies wont have any new products to sell for the next 10 years if the merger does go ahead

      1. Anonymous Coward
        Anonymous Coward

        Re: The PBS* always loses

        Some of us were made redundant by STC when it tried to gobble ICL. Schadenfreude time next year when the analysts said sell STC because it has no longer got the R&D people for new products.

    2. Anonymous Coward
      Anonymous Coward

      Re: The PBS* always loses

      But you're only seeing this from the Execs' point of vie...

      Oh, I see!!

    3. bombastic bob Silver badge
      Happy

      Re: The PBS* always loses

      you need 10 of them for a "top 10" list though...

      1. PhilipN

        Re: The PBS* always loses

        10 Call the Chairman of the bidder to meet for coffee to tell him you'll support the takeover if he guarantees you as CEO if the combined outfit.

  5. Pascal Monett Silver badge

    The tug of war continues

    Xerox has stolen one end of HP's blanket and now both are tugging on it, yelling and screaming.

    This is fun to watch, whatever happens.

    It'll be less fun when the inevitable layoffs begin. And they will, whether or not those two merge.

  6. jonathan keith Silver badge

    They can fight each other into the ground as far as I'm concerned - I've never bought anything from Xerox* and the cost over time of buying HP these days is far too high.

    * The chances are that I've paid them plenty in Patent license fees, mind you.

    1. Sandtitz Silver badge

      @J. Keith

      "the cost over time of buying HP these days is far too high."

      I assume you're talking about printers here. With what did you replace the HP's?

      1. Alan Brown Silver badge

        Re: @J. Keith

        Bear in mind that "HP Printers" in the laser arena were almost always rebadged Canons anyway - not that I'd buy those as they have the _same_ postscript deficiencies that HP do (which is hardly surprising really....)

        We're getting good mileage out of our Kyoceras (one has 2 million prints on it) and if you're printing over 1000ppm then look at the bigger Taskalfas as they're _CHEAP_ to run.

        1. Anonymous Coward
          Anonymous Coward

          Re: @J. Keith

          Unlike HP I dont think Kyocera are in the 1000 ppm business - 100 ppm maybe.

          ( thats assuming conventional page sizes - I'm not sure what Kyocera offers for multi-metre sizes )

        2. BebopWeBop Silver badge

          Re: @J. Keith

          HP used to outsource much of their laser engine development to Canon (and paid a hefty price for doing so) - the printers outside of the marking engine themselves tended not to be rebadged but homegrown, although as time progressed, lower end (and one assumes eventually higher end) machines were outsourced for design as was much of the software, Having not worked for HP (when it wasstill an integrted ish company although the instruments has departed) for more than 10 years, I could not make a guess as to the current situation.

      2. jonathan keith Silver badge

        Re: @J. Keith

        @ Sandtits

        Epson EcoTanks. Doing that will save the small non-profit I work for almost £2k per year in ink costs alone.

        @Alan Brown

        Nowhere near those volumes, I'm afraid. Four small offices with small, simple but frequent printing needs.

      3. Doctor Syntax Silver badge

        Re: @J. Keith

        "With what did you replace the HPs?"

        It depends when you bought the HPs. In my case it was a long time ago and it's a laser printer so it seems unlikely it will ever be replaced but as it's a single-sided mono it has a Brother.

        1. Mike Richards

          Re: @J. Keith

          I would have recommended a little Samsung laser printer which are cheap as chips and utterly reliable, but I see they have been emborged by - oh - HP.

  7. simonlb Silver badge
    FAIL

    No winners here except the banks

    It's a real shame. Both HP and Xerox were once - many, many years ago - excellent examples of technology companies that had good, innovative product lines, that were properly and responsibly managed and that were places people would aspire to work for because they were not only great places to work but actually working for them was both an honour and something to be proud of. This has now been completely destroyed by years of bad management and corporate greed, and to see them now being used as pawns in a selfish game of Monopoly by someone who already has more money then they'll ever need just to make even more money is both disgusting and tragic. If this goes through, the only winners here will be the banks who will be forcing policy on whichever company survives to cover their potential losses, and the losers will be tens of thousands of innocent employees from both current companies.

    1. bombastic bob Silver badge
      Unhappy

      Re: No winners here except the banks

      HP went downhill when the founders (Hewlett and Packard) no longer ran the place

    2. Phil Kingston

      Re: No winners here except the banks

      and lawyers. lawyers are always winners

  8. Anonymous Coward
    Anonymous Coward

    The "innocent" employees who have helped both outfits into the gutter? If by no other means, not resisting bad board decisions?

    If they're any good, they should have fled long ago to more deserving employers. If not, 'innocent' less appropriate than 'culpable'.

    They do expect - and get - pay raises and so on when things go well. The other side is operable too.

  9. Anonymous Coward
    Anonymous Coward

    No mention of the main driver behind this exercise of asset stripping and profiteering in the article, the Wanker of Wall Street, Carl Icahn.

    1. Anonymous Coward
      Anonymous Coward

      People go on about Russian interference in the US, but both Russia and China must surely be thinking why bother when there are so many rich Americans planning to got still richer by destroying yet more of the economy.

  10. Blackjack

    Both companies are crap

    None of them have made decent stuff in over a decade. The decay is more recent in HP case, but if both companies died I wouldn't care.

    HP used to make decent Laptops over a decade ago and Xerox used to be the king of Photocopier machines in the past century. But this is what decades of being ruined by people who only care about PROFIT instead of making quality products leads to.

    1. simonlb Silver badge

      Re: Both companies are crap

      No, I'm going to argue that the TouchPad was a really good tablet with an excellent OS, but HP priced it directly against the iPad which was complete insanity. Then, instead of cutting the prices to get sales moving and establish the tablet they decided after six weeks to give up completely, shut down the production lines and have a fire sale to dump all the stock. That is after they initially paid $1.2 billion to buy Palm to acquire the tablet OS they had been developing and enter the tablet market.

  11. James Anderson Silver badge

    Xerox ... how sad

    Remember this is the company that brought you GUI interfaces, the mouse WYSWYG editors, ethernet.

    All of which made a fortune for Steve Jobs. Just goes to show imitation beats innovation when it comes to profits.

    1. Old-dog

      Re: Xerox ... how sad

      The mouse was not invented by Xerox, but improved by Apple.

    2. Doctor Syntax Silver badge

      Re: Xerox ... how sad

      "Just goes to show imitation beats innovation when it comes to profits."

      Actually it shows that innovation is of no use in itself unless management has the wit to make use of it. Xerox's didn't, Jobs did.

      1. Anonymous Coward
        Anonymous Coward

        Re: Xerox ... how sad

        My involvement with Xerox suggested that the engineers were excellent but the management wasn't so much stuck in the mud as epoxied into the basalts.

  12. TrumpSlurp the Troll Silver badge

    HP

    All that is left of the original company is a couple of capital letters.

    Why do people keep on talking about as if it was the original but fallen on hard times?

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