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First Floor Labs Sold A Company To Facebook, Graduated Three YC Startups, And Is Accepting Applications

Alexia Tsotsis — Wed, 22 Feb 2012 22:53:11 +0000

Last Friday I visited the Aol* building on Page Mill Road in Palo Alto. But instead of the stench of death and decay you would normally find at a dying company, I found joy and the hustle and bustle of youth. More importantly, I found startups, tens of startups with founders eager to show me around the various VC firms (SoftTech, Morado) and incubators occupying the building’s first floor.

Because someone brilliant at Aol decided to give away the space to startup incubators instead of renting it out to ~~other dead men walking~~ companies, it was filled with light and life. Who ever you are, you a genius.

Anyways, on the first floor of this huge Aol building, in addition to StartX and education-focused incubator Imagine K-12, is a modest accelerator called First Floor Labs.

Founded by Stanford MBA and Former Facebooker Maisy Samuelson and Aol Ventures dude Adam Smith, First Floor Labs basically provides office space and amenities like a kitchen and a gym to pre-Series A teams of between one to four people — startups that would otherwise work out of coffee shops or apartments. Thanks to an Aol Ventures sponsorship, the space is free for six months to all accepted startups without further obligation or any equity transferral.

Samuelson says that she and Smith are in it because they are passionate about startups and the tech community (In Smith’s case having early access to hot startups never hurts a VC), “I love working with an established company to help the next generation of entrepreneurs succeed. It’s amazing to have so much talent and energy in one room. “

“Smoopa grew from 20,000 downloads to more than 100,000 downloads while we were in First Floor Labs and it’s been great to have smart people around to help us scale,” First Floor Labs resident and Smoopa co-founder Mendel Chuang told me, “The amount of knowledge and expertise in this community is incredible.”

Already one startup, Digital Staircase, has gone to Facebook, while three (stealth) others made it into the upcoming YCombinator class (only three applied).

Applications for First Floor Labs spring session, which will house in 15 startups instead of 10, are due on March 9th. Also, I’m going to try work out of there every Thursday from now on, so if you’re around, come say hi!

*Disclosure: TechCrunch is owned by Aol, in case this is your first time visiting the Internet. I think they write it ‘AOL’ though.

#1 FB Dating App Zoosk’s New Model: Seducing Couples With Advice and Date Discounts

Josh Constine — Wed, 22 Feb 2012 22:40:57 +0000

Every time a dating site succeeds in making a match, it loses two users. To offset churn, Zoosk tells me that tomorrow it’s announcing a new business model that complements subscriptions with date discounts, expert relationship advice, gift ideas, holiday reminders, online scrapbooks. The products could convince users to pay even after they’ve found their sweethearts. If users fall in love with the new revenue streams, the whole dating industry could start courting happy couples.

Zoosk now has 15 million monthly active users across its site, mobile, and Facebook app. It also has a $90 million annual sales run rate, up from $20 million in 2009. Still, it’s had to raise $40.5 million to buy ads and failed dating sites so it can replace the users who cancel their subscriptions once they’ve found a mate. Most users don’t want to look like losers by sharing their Zoosk activity on Facebook or Twitter, so the service misses out on the organic virality enjoyed in other verticals.

But Zoosk may have found a way out of this downward spiral. While a $12-$30 monthly subscription may seem expensive, singles, and men in particular, are used to forking over cash to impress dates with dinners, drinks, and nightlife. Zoosk could grow profits if it captured some of this spend by offering discount package dates similar to romantic experience subscription service BeCouply.

Once a couple emerges from the high-priced date honeymoon period, Zoosk could sell them on reminders and gift ideas. It could take cut of spend on birthdays, Valentine’s Day, and the winter holidays, as well as digital scrapbooks.

Finally, Zoosk could identify couples on the verge of breakup through on-site behavior analysis that surfaces users returning to their profiles for the first time in months. Then it’s as simple as targeting them with in-house ads about how true love never dies and they’ll never find someone better.

[Image Credit: iStockPhoto]

Fare Play: Rivals Have Reason to Be Wary if Square Grabs NYC Cabs

lab_poster — Wed, 22 Feb 2012 22:38:07 +0000

Yesterday, the New York Times reported that New York City’s Taxi and Limousine Commission is considering the installation of tablet computers in the back of taxicabs, and that Square — the Jack Dorsey-led mobile payments start-up that nabbed $100 million in funding from top-notch investors last year — will throw its hat in the ring to power the credit card payments in cabs.

The experiment, should it become a reality, would involve a special Square-built payment terminal on tablets in the back of 50 taxicabs to start, as well as a Square application that would process riders’ credit card payments. And the swap-out — and the stakes — would go beyond just hardware.

If tablets running Square were to supplant some of the existing technology in the back of New York City cabs — currently supplied by Creative Mobile Technologies LLC and VeriFone Systems Inc., one of the world’s largest electronic payment companies — fee structure and revenue from “Taxi TV” content would also come into question. (It’s important to note that the New York TLC hasn’t formally submitted the Square proposal to its board of commissioners yet; it plans to do so on March 1.)

Of the 13,237 official taxicabs currently on the road in New York City, VeriFone processes the credit card payments in approximately half of them; CMT handles the other half. The two companies were awarded the contracts in the summer of 2007, after the Commission had put out a challenge seeking innovative tech and electronic data tracking for taxicabs; by November 2008, the technology had been fully implemented in all cabs.

The systems currently use cellular data to power the transactions, which is also technically possible through an iPad or another type of tablet device. In addition to the payments technology, current systems provide automated dispatch capabilities, GPS, computerized trip logging and text messaging — also functions that a tablet could likely provide.

So hardware aside, consider the content on the Taxi TV’s. Those loops of news updates, late-night talk show clips and dining guides that cab riders see on the backseat TVs are the result of a partnerships that VeriFone and CMT have forged with TV networks (though the TLC commands 20 percent of the screen time on the primary channel for public service announcements). VeriFone has rolled out NBC content in 12,000 cabs across the U.S.

While we know that content can stream quite nicely on tablet devices, too — and likely provide an even slicker viewing experience — the companies are making money off of back-of-cab media and would lose that if they lost control of the screen. At the same time, more gaming and social networking options are being proposed for the back of cabs, which would provide potential ad revenue streams.

But ultimately the real sticking point could be fees. It’s unclear what a new payment structure would look like, but David S. Yassky, the chairman of the Taxi and Limousine Commission, has been quoted as saying he hopes credit card transaction fees could be lowered.

The TLC Web site currently says that cab owners can expect credit card and debit fees to average 3.5 to 4 percent, whereas Square charges its small-business users 2.75 percent per transaction without additional interchange fees. If Square offers taxi cab medallion owners — who also pay for the installation of the technology up front — a lower fee option on credit card transactions, the way it does for small businesses that shy aware from investing in bulkier credit card systems, Square could have a leg up on its rivals.

And those rivals are unlikely to remain quiet.

Verifone has previously taken direct aim at San Francisco-based Square for what it alleged was a security flaw, saying that Square lacked the ability to properly encrypt data. (Square’s Dorsey quickly responded by saying that credit cards are inherently not secure, but that Square continually reviews, verifies, and stands behind the protections that it has put into place in its credit card reading device.)

For now, the San Jose-based payments giant isn’t offering a formal response to the new taxi cab proposal. A spokesman for VeriFone would say only that the company is not going to comment on a proposal nobody has seen yet.

According to the New York Times, Creative Mobile Technologies has also raised concerns about the security of Square’s technology and has previously requested that the vote on the proposal be delayed.

But if the proposal were approved next month, the pilot program using Square on tablets could kick off “within a month or two,” according to Allan Fromberg, a spokesperson for the TLC.

And that’s when things will get interesting in the back of taxicabs.

(Photo courtesy of Flickr/JosiSilva)

Hack Makes Nook Touch E-Ink Display Almost As Responsive As LCD

Devin Coldewey — Wed, 22 Feb 2012 22:30:54 +0000

As you probably know, bistable or passive displays like the E-Ink ones in e-readers focus on battery life and readability rather than color and interactivity. The latest devices have been optimized for fast page refreshes and touch operation, but generally you’re still waiting a half a second or so for the screen to flip over to the next page, menu, or what have you.

But that’s not all they’re capable of. We’ve seen hacks before, but this one definitely takes the cake. Check out this video of a Nook Touch from XDA hacker marspeople:

Bear in mind this is strictly a hack and not a full-on release or commercially developed product. Most people wouldn’t want to use the device in this state: it’s not consistent in how fast it responds, there are graphical glitches, and it probably drains the battery like crazy. But the fact is they’ve got a passive display refreshing ~15-20 times per second and responding to touches instantly like a normal tablet.

The possibilities for this generation of readers are limited: few people are going to install a hack like this, and even if they did, not much content is really designed to be consumed this way. Pages are a natural way to read books, and scrolling constantly is kind of a pain. But it’s amazing to see these displays, usually so slow and static, being used so actively. Here’s hoping the next displays from E-Ink (or Bridgestone, or whoever) are capable of even more. Despite what people might say, the passive display still has a lot of potential to grow and evolve.

[via The Digital Reader]

Liveblogging Hewlett-Packard’s Earnings Conference Call

lab_poster — Wed, 22 Feb 2012 21:53:58 +0000

HP’s quarterly results are out and the early judgement of investors is that it was a mixed bag. While per-share earnings at 92 cents, beat the consensus of 87 cents, sales were light by a bout $700 million.

It was a tough quarter, which is something that HP executives will likely remind us all about during the conference call that’s set to get underway any minute. There were challenges on every front, from the shortage of hard drives, to the decline in demand for printers.

So what’s the plan now? Perhaps CEO Meg Whitman will give us a look at the year ahead on the conference call. I’ll be listening and telling you what I hear.

2:03 pm: And we’re getting underway with some opening comments from Steve Feiler head of investor relations. Meg and Cathie will also be speaking.

The audio is a little off. Maybe Steve should sit a little closer to the phone?

2:06 pm: And here’s Meg. We’ve been working hard to set the right tone and calm the waters. She’s been traveling the world talking to HP employee and customers. 80 customer visits. So what have I found. I have found some skepticism and some incredible support.

The more time I spend time listening and learning the more passionate and determined I become.

I want you to understand where we’re going and why. In Q1 our performance tracks pretty close to the expectations we set in Novemeber. That said we met our guidance. It was a tough quarter with troubles in every segment. With the supply challenges we focused on profitability rather than volume.

Now on to the printer unit. All of you know IPG has been the lifeblood of our company for a long time. But we also have to recognize that the business is being pressured on multiple fronts. We have work to do here and working to rebuild IPGs leadership.

Software is a critical part of our portfolio and key to strategy. Autonomy acquisition is going well. We see synergies across all our businesses.

2:12 pm: Now on to the macroeconomic environment. US has some positive signs. Guarded about Europe.

In the six months I’ve been CEO my perceptions of the business have changed. her issues are in three buckets: Simplicity. She’s talking about SKU reduction which means reducing the number of models of different products. In that Meg is taking a key page from the Steve Jobs playbook at Apple circa 1997.

2:14 pm: The second bucket is investment. There’s another stab at prior management for not investing in key lines of business.

Our current cost base just isn’t supportable. We’ve been running our business in silos. It’s made us too costly and to slow. We need to standardize, optimized and automate many business processes.

We have got to save to invest. We have got to save to grow.

I have no doubt that we’ll turn HP around.

2:17 pm: And here’s CFO Cathie Lesjack running through the numbers. Half of the revenue decline came from hard drive shortages. We made the decision to priortize profitability over volume. We expect the supply will remain constrained in Q2.

PSG reported $8.9 billion in sales down 15% year on year. Shipments down 8 percent.

Wow, consumer PC sales down 25 percent. That’s gotta hurt. That’s part hard drive shortage, but also some damage taken by Apple and the iPad.

Lesjack is talking a bout the legal spat with Oracle. The uncertainty around the Itanium-based servers has hurt sales considerably, and as legal papers show, HP makes a lot of money servicing those servers.

Software is looking good generally, but its too small to make a dent in the weak results elsewhere.

2:26 pm: Lesjack: We remain cautious about consumer and business spending. Hard drives will remain a problem. We still have hard work to do to align inventory levels with demand.

The expected decline in revenue will impact margins.

Back to Meg: I’d really like you all to take away these three messages. We’re committed to clarity. Two we’re getting back to basics. Three we are building HP to last, focusing not on short term expectations.

Time for Q&A with analysts: First question from Barclay’s. It seems like a tone change for the printer group. Last time it sounded economic and not secular, this time it sounds like it’s secular. He’s also worried about reaching the $4 EPS guidance for the year.

Meg: In IPG we fact a number of challenges. Its a more mature market. I’m convinced it relates to macro-economic problem. The sell-through of ink is at low levels, and its not just our ink, but industry wide. We do see pockets in decline. Consumers are printing fewer photos. We’re steady as she goes. Going to think hard about accelerating new business to compensate for the loss in ink sales. Also the headwinds from the Japanese yen will remain. It’s a terrific business, but we’ve got some work to do.

Lesjack is talking now about the guidance question. The usual seasonal pattern shows that the second half of the year is stronger than the first. We think the hard drive shortage will be largely over by the third quarter.

Lesjack: There’s also an inventory correction to work through that will be largely done in the second half. Also Autonomy will start showing results in the second half.

Question from Goldman Sachs: When you expect to return to a “steady state” in IPG. How should we think about steady state.

Lesjack: There are three impacts to IPG: We continue to see weak consumer demand. That’s a headwind for ink sales and what we expected. And then currency, and then there’s a channel inventory correction. We expect challenging demand, but without the same headwinds in first half of the year.

Sanford Bernstein question: There’s evidence of significant share loss across all businesses. It doesn’t appear you’re ceding share to improve profitability because the numbers don’t support it. The data points to a widespread lack of competitiveness. I know you’ve talked about stabilizing the buisness. What does that mean and how do you get there.

Meg: We prioritized profitability. We made a decision to priortize profitable products and customers and regions. Reitering the hard drive hope to get through it by second half. We didnt have the perfect match for the disk drives we needed. Those two business I’m not worred about endemic share loss. If you look at some of our other business. Printers and ink, takes me to three big challenges. I don’t know its a widespread lack of competitives. Our own execution, turning orders into products faster than our competitors. We’re world class in how we buy our components. Our systems and processes we under-invested. We have an enourmous number of SKUs, which leads to complexity in support and in selling. Some of our competitors do some of those things better than we do.

Then the Business Unit leaders are working hard to lower their costs, bring new products to market. PSG has some great products coming up, and in ESSN too. Each BU leader has to work on strategic challenges. We have got to make sure we own the tectonic plate shift. Cloud, information management and one other I didn’t catch. (sorry.)

2:40 pm: Lesjack we shipped servers that were less richly configured as a result of the hard drive shortage.

Follow-up question. When you both mentioned this concept of stabilizing the business, what does that mean? Is that holding share, growing in absolute terms? How will investors know, and what is the time frame.

Meg: The first thing we have to do is stop the revenue decline. The second is then we have to start growing revenue, you have to gain share in every single market. The unit cost is going down and you have to sell more. I would hope that as we get through 2012, you’ll see revenue decline flatten out and as we get into 2013 we’ll start to grow. It depends on how fast we can get after some of these challenges in the business. A lot of this is in our own hands.

Lesjack: We let you know what our outlook is, and we deliver to it.

Meg: If you look at companies who go through these turarounds, these things are not done in less than two years and often they take 3-5 years. You’ll see forward progress. We’ve got a journey ahead of us.

Morgan Stanley: How are you assuming Windows 8, Intel’s Romley chip and other things will help you stabilize the business.

Meg: We feel good bout Windows 8. We have x86 products. We have good reviews on our first ultrathin product. The better Windows 8 is the better off we are. We’re rooting for a great Windows 8 product. You have to remember that PSG is only a part of the entire portfolio.

Question from Raymond James: Why did HP have such a significant impact from hard drive shortage relative to competitors. What is it about the supply chain that is the biggest in the world that put HP at an disadvantage.

Meg: We focused on profitability versus share. It was a remarkably fluid situation. Matching drives you ordered with the models. We were not as effected as we needed to be. It showed us that we have some challenges in our supply chain. We’ve got to get better in taking an order and delivering a product.

2:47 pm: Meg We were not as advantaged as I would have anticipated. I think we’re world class at buying, but if you look at the whole thing there’s some advantages we can get.

Cross Research: How are you interacting with your direct reports and how are they breaking down the silos.

Meg: We actually are a team. We have a cadence and the rhythm in how we meet. I couldn’t be more pleased with how the team is working together. If you were to ask the senior team, it would be a pretty positive feedback versus previous management. One thing I’m working on is bringing the entire product portfolio to customers as one HP. Our biggest customers want to buy from one HP, and not from different segments. I think the executive council members say the relationship with the CEO is as good as its been.

Lesjack: We’ve moved out of offices and into cubes. We’ve spoken more frequently with Meg than we have in the entire year. More over the cube wall quick discussions. (Wow, all the senior execs at HP work out cubicles instead of offices?)

Missed an entire question there. I’ll catch the next one.

Meg: Talking about printer business. The yen is a real problem.

Cathie: If you look at the yen increase year over year it’s like 7 percent. It’s been increasing over the last couple of years. We’ve been able to absorb it when it just became too difficult to take the cost out fast enough to offset appreciation in the yen.

2:54 pm: Question about services investment. Where is the bottom in services margins?

Cathie: The peformance we delivered was in line with the expectations we gave last quarter. Revenue was up 1% or flat in constant currency. The services we put in that cateogory are services around cloud and security. We are on this long term turnaround, and we are making progress, but we did see some margin compression from contract renewal. Almost all contracts get renewed at lower prices. We’re making investments in processes and IT to increase our ability to take costs out of services quickly. If you look at the outlook for 12, we expect margins will continue to be down.

Meg: The way you have to think about services, we are going through a multi-year turnaround. In services we know what the problem is, we have a plan, but it’s not a quick fix. It goes back to the assets we acquired in 2008 (EDS) then ran right into 2009 and the global recession. This has to be our solution selling arm, but we have a mutli-year journey ahead of us.

2:58 pm: Incidentally, as I’m typing HP shares are down more than 1 percent after hours, and that’s after falling 1.4 percent during the regular session. The view of the market appears to be more negative than it was early on when the mixed bag of numbers first hit the wires.

I missed Maynard Um’s question however.

3:04 pm: One more question: One about whether streamlining processes and what it means for operating expenses. And a follow up for Cathie about cash conversion levels.

Meg: We have a strategy that I’ve seen work many times before. We have to save so we can invest. We have to streamline processes, optimize the supply chain, reduce SKUs, and rationalize the go-to-market. What never works is to keep your cost structure the same and layer investment over it. Stabilize declining revenues and gain share in the categories we can keep. This is what great leaders do.

Cathie: We pay our annual bonuses in Q1, we accrue the expense in the previous year. It’s typical that Q1 is a low cash flow quarter.

Meg is wrapping up. She’s incredibly optimistic but she and her team have a lot of work to do. And that’s it.

HP Q1 Revenue Down 7 Percent To $30B, Net Income Down 44 Percent, Software Sales Up 30 Percent

Leena Rao — Wed, 22 Feb 2012 21:22:53 +0000

HP just reported mixed first quarter earnings. The company posted non-GAAP diluted earnings per share of $0.92, down 32 percent from the prior-year period (GAAP diluted earnings per share were $0.73, down 38 percent from the prior-year period). First quarter net revenue came in at $30 billion, down 7 percent from the previous year. Analysts expected earnings of $0.87 cents a share on revenue of $30.7 billion. GAAP Net Income was down 44 percent to $1.5 billion.

“In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,” Meg Whitman, HP president and chief executive officer, said in a statement. “We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.”

In the Americas, first quarter revenue was $13.2 billion, down 9 percent year over year. Europe, the Middle East and Africa revenue of $11.7 billion was down 4 percent year over year, and revenue in Asia Pacific was $5.2 billion, representing a 10 percent decrease year over year.

Revenue from outside of the United States in the first quarter accounted for 66 percent of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.1 billion, down 13 percent from the year-ago period, and representing 10 percent of total HP revenue. Revenue in HP’s commercial businesses declined 4 percent year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 23 percent year over year.

In terms of specific product lines, the Personal Systems Group (PSG) revenue declined 15 percent year over year, and services revenue of $8.6 billion grew 1 percent year over year with a 10.5 percent operating margin. Imaging and Printing Group revenue declined 7 percent year over year. Consumer hardware revenue was down 15 percent year over year.Enterprise Servers, Storage and Networking (ESSN) revenue declined 10 percent year over year.

On the bright side, software revenue grew 30 percent year over year with a 17.1 percent. HP says software revenue was driven by 12 percent license growth, 22 percent support growth and 108 percent growth in services.

HP Beats Street’s Lowered Expectations

lab_poster — Wed, 22 Feb 2012 21:18:23 +0000

Hewlett Packard just reported quarterly earnings, and the results show that HP earned 92 cents a share on sales of $30 billion.

The EPS number exceeded the expectations of analysts, who had anticipated HP would report per-share earnings of 87 cents. But sales at $30 billion even were light of the $30.7 billion Wall Street had expected.

Sales of PCs fell 15 percent year over year with an operating margin of 5.2 percent. Consumer sales fell by 25 percent and corporate PC sales fell 7 percent, while sales on a unit basis fell 18 percent. HP had faced a tough quarter on many fronts. With the shortage in hard drives caused by the last year’s floods in Thailand sapping overall demand for PCs, sales have been tricky and it showed. Corporate demand was thought to be relatively stable, while consumer demand continues to be slow amid stiff competition from Apple’s iPad and a tough economy overall.

Tony Sacconaghi, an analyst with Bernstein Research, said in a research note to clients issued today that HP, despite being the world’s largest vendor of PCs, appears to have struggled more with the Thailand problem than any other vendor.

On the printer front, HP’s Imaging and Printing Group saw its sales decline by 7 percent with a shockingly low 12.2 percent operating margin, down from 15.4 percent in 2011. HP’s printer unit has significant long-term problems, not the least of which is the fact that people are generally printing less. At first blush, this appears to be a serious blow to a business unit that was once the pride of the company.

Enterprise servers, Storage and Networking saw a 10 percent decline overall. The Business Critical server business — the one involving servers running Intel’s Itanium chip, which is the subject of an HP lawsuit against Oracle — saw its sales decline 27 percent. Networking revenue was flat and everything else was down.

Software was a bright spot, but a small one. Sales were up 30 percent and services grew 108 percent, but again, that’s off a low base and nowhere near large enough to offset the troubles anywhere else.

HP’s guidance for the current quarter is also below the street consensus. HP says it sees earnings of 88 to 91 cents, versus the street forecast of 95 cents. There’s no change to the full-year EPS guidance calling for $4 a share in 2012.

HP shares are down by 19 cents, or less than 1 percent in after-hours trading as of 4:26 pm ET. It’s a mixed bag, so given Dell’s performance yesterday, it seems investors are willing to accept an EPS beat alongside a slight revenue miss.

That’s a quick look at the results. HP’s conference call with analysts begins at 2 pm PT. I’ll be dialed in and liveblogging the blow-by-blow.

Here’s HP’s statement:

HP Reports First Quarter 2012 Results
— First quarter non-GAAP diluted earnings per share of $0.92, down 32% from the prior-year period and above previously provided outlook of $0.83 to $0.86 per share
— First quarter GAAP diluted earnings per share of $0.73, down 38% from the prior-year period and above previously provided outlook of $0.61 to $0.64 per share
— First quarter net revenue of $30.0 billion, down 7% from the prior- year period
— Returned $1.0 billion in cash to shareholders in the form of dividends and share repurchases
PALO ALTO, Calif., Feb. 22, 2012 – HP today announced financial results for its first fiscal quarter ended January 31, 2012. For the quarter, net revenue of $30.0 billion was down 7% from the prior-year period, and down 8% when adjusted for the effects of currency.
GAAP diluted earnings per share (EPS) was $0.73, down 38% from the prior-year period. Non-GAAP diluted EPS was $0.92, down 32% from the prior-year period. First quarter non-GAAP earnings information excludes after-tax costs of $364 million, or $0.19 per diluted share, related to amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
―In the first quarter, we delivered on our Q1 outlook and remained focused on the fundamentals to drive long-term sustainable returns,‖ said Meg Whitman, HP president and chief executive officer. ―We are taking the necessary steps to improve execution, increase effectiveness and capitalize on emerging opportunities to reassert HP’s technology leadership.‖

Earnings highlights
Information about HP’s use of non-GAAP financial information is provided under ―Use of non-GAAP financial information‖ below.
Trends and regional performance
In the Americas, first quarter revenue was $13.2 billion, down 9% year over year and down 8% when adjusted for the effects of currency. Europe, the Middle East and Africa revenue of $11.7 billion was down 4% year over year and down 5% when adjusted for the effects of currency. Revenue in Asia Pacific was $5.2 billion, representing a 10% decrease year over year and down 12% when adjusted for the effects of currency.
Revenue from outside of the United States in the first quarter accounted for 66% of total HP revenue. BRIC countries (Brazil, Russia, India and China) generated revenue of $3.1 billion, down 13% from the year-ago period, and representing 10% of total HP revenue.
Revenue in HP’s commercial businesses declined 4% year over year. Revenue in HP’s consumer businesses, within PSG and IPG, was collectively down 23% year over year.
Business group results
— Personal Systems Group (PSG) revenue declined 15% year over year with a 5.2% operating margin. Commercial client revenue declined 7%, Consumer client revenue declined 25% and Workstations revenue was flat. Total units were down 18%, with a 19% decline in desktop units and an 18% decline in notebook units.
— Services revenue of $8.6 billion grew 1% year over year with a 10.5% operating margin. Technology Services revenue grew 2%, Application and Business Services revenue was flat and IT Outsourcing revenue grew 2% year over year.
— Imaging and Printing Group (IPG) revenue declined 7% year over year with a 12.2% operating margin. Commercial hardware revenue was down 5% year over year with commercial printer units down 10%. Consumer hardware revenue was down 15% year over year with a 15% decline in printer units.
— Enterprise Servers, Storage and Networking (ESSN) revenue declined 10% year over year with an 11.2% operating margin. Networking revenue was flat, Industry Standard Servers revenue was down 11%, Business Critical Systems revenue was down 27% and Storage revenue was down 6% year over year.
— Software revenue grew 30% year over year with a 17.1% operating margin, including the results of Autonomy. Software revenue was driven by 12% license growth, 22% support growth and 108% growth in services.
— HP Financial Services revenue grew 15% year over year driven by an 8% increase in net portfolio assets and flat financing volume. The business delivered a 9.6% operating margin.
Asset management
HP generated $1.2 billion in cash flow from operations in the first quarter. Inventory ended the quarter at $7.3 billion, with days of inventory up 3 days year over year to 28 days. Accounts receivable of $15.9 billion was up 2 days year over year to 48 days. Accounts payable ended the quarter at $12.4 billion, down 2 days from the prior- year period at 48 days. HP’s dividend payment of $0.12 per share in the first quarter resulted in cash usage of $244 million. HP also utilized $780 million of cash during the quarter to repurchase approximately 29 million shares of common stock in the open market. HP exited the quarter with $8.2 billion in gross cash.

Outlook
For the second quarter of fiscal 2012, HP estimates non-GAAP diluted EPS to be in the range of $0.88 to $0.91 and GAAP diluted EPS to be in the range of $0.68 to $0.71.
Second quarter fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.20 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
There is no change to HP’s previously provided full year fiscal 2012 outlook of non-GAAP diluted EPS of at least $4.00 and GAAP diluted EPS of approximately $3.20.
Full year fiscal 2012 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.80 per share, related primarily to the amortization of purchased intangible assets, restructuring charges and acquisition-related charges.
As part of its annual financial review process, HP implemented several organizational realignments effective Q1 FY12. To provide improved visibility and comparability, HP has reflected these realignments in prior financial reporting periods on an as-if basis. These realignments resulted in, among other things, the transfer of revenue within and among various financial reporting segments and business units. The changes do not impact HP’s previously reported consolidated net revenue, earnings from operations, net earnings or earnings per share at the company level. To reflect these changes, HP released modified quarterly and annual consolidated condensed statements of earnings, segment financial results and statements of business unit revenue for fiscal 2010 and 2011, which are available on HP’s Investor Relations website at www.hp.com/investor/home.
More information on HP’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on HP’s Investor Relations website at www.hp.com/investor/home.
HP’s Q1 FY12 earnings conference call is accessible via an audio webcast at www.hp.com/investor/2012Q1webcast.

AdRoll Hires Google Sales Director Suresh Khanna

Anthony Ha — Wed, 22 Feb 2012 20:57:28 +0000

Aiming to become one of the giants of online advertising, ad retargeting startup AdRoll has hired Googler Suresh Khanna as its vice president of sales.

In nearly six years at Google, Khanna held a number of roles. Most recently, he was director of new advertiser sales, where he says he led the North American team for acquiring mid-market and larger advertisers. Until now, Khanna says AdRoll hasn’t had anyone focused on building out the sales team, so one of his big goals is to “attract rock stars.” He also says that he wants to help AdRoll build relationships with larger advertisers and ad agencies.

“I think it’s very early days on retargeting,” Khanna says. “We’ve got 3,500 customers but, again, I think the opportunity is in the millions of advertisers.”

Retargeting, where ads are delivered based on your past online behavior, sometimes get a bad rap. Khanna himself admits that he had a similar “knee jerk” reaction when he heard about AdRoll, thinking of it as a system where, say, someone abandons an e-commerce shopping cart with kitchen knives, then suddenly finds that they’re bombarded with kitchen knife ads wherever they go online. The key, he says, is to expand the definition of retargeting from that narrow use case to thinking “more strategically” about taking advantage of “all the data you have on all your customers.”

“I think that’s classic early days,” he says. “When you’re on the bleeding edge, that’s what the first round of people in the space might have done, but we need to push beyond that.”

AdRoll recently announced that it quadrupled revenue last year and was profitable for the first time.

(I also see, via LinkedIn, that Khanna is the co-founder and co-owner of Kasa Indian Eatery, one of my favorite restaurants in San Francisco.)

Tabber Adds An LED Light Show To Any Guitar

John Biggs — Wed, 22 Feb 2012 20:54:04 +0000

Tabber is an upcoming Kickstarter project that essentially adds an LED light show to your guitar and, more importantly, allows you to learn to play chords and solos by following the lights on the fretboard.

The idea is definitely not new. The Fretlight guitar beat these guys to the punch and I wonder what patent issues they will have to deal with. However, as an idea, it’s pretty ingenious. The Tabber is a “sleeve” that fits over the neck of your guitar and it should work, as the folks at Tabber reiterate, on any git-fiddle in your possession.

The project uses an open source Arduino board and open source software to drive the lights and/or create an active light show for guitarists who don’t need TAB help and are instead interested in looking like Peter Frampton in the year 2020.

The project is launching soon on Kickstarter and should be an interesting addition to the gigger’s bag of tricks.

Project Page

Sociable Labs’ EverShare Adds FB Auto-Sharing And Pinterest Boards To Any Site

Josh Constine — Wed, 22 Feb 2012 20:49:29 +0000

Referral traffic is pouring out of Pinterest and Facebook’s Open Graph frictionless sharing. With Sociable Lab’s licensable EverShare you can snatch their functionality without any serious development work and soak up some page views. EverShare lets you host your own Pinterest-style product or content boards to give your users their social curation fix. It also instantly roots your site into Facebook’s confusing APIs so purchases, comments, reviews, and pins are automatically blasted at friends of your visitors.

Pinterest’s simple, stable sharing canvas has struck a chord with ecommerce shoppers and middle America’s women in particular. You could add Pin It buttons to your site and hope they get clicked, but great websites steal, they don’t borrow. Sociable Labs licenses a website personalization SaaS to sites that want to instantly get social. EverShare Gallery mimics Pinterest’s home page activity board, but only displays trending products and those shared by a user’s friends.

I’ve spoken to several developers and they want to add Frictionless Sharing, but they’ve found the Facebook developer docs confusing. Considering how most sites and apps that integrates it see traffic go through the roof, there’s surely plenty of sites looking for a turnkey hose into the Facebook Ticker, Timeline, and news feed. EverShare Connector makes it as easy as writing a check.

Once integrated, users don’t even have to go back to Facebook to see what friends are sharing. The sidebar activity feed also includes the option to turn off sharing, for those who don’t want friends to know how many shoes they buy.

Virality best practices are developing faster than most companies can employ them. Meanwhile, good developers and designers are in short supply. For content sites, buying referral traffic might not produce big ROI. But for ecommerce sites, a monthly SaaS subscription could pay for itself quickly since Sociable Labs says socially sourced traffic converts 250-300% higher.