HP, eBay and now Symantec: Welcome to Splitsville

For Silicon Valley, 2014 is the year of the breakup.
William Hewlett and David Packard’s iconic 75-year-old Palo Alto company is dividing into a PC-printer business and an operation that sells business hardware, software and services.
San Jose-based eBay Inc. is peeling off its PayPal electronic payments unit.
Symantec Corp., based in Mountain View, is dividing its security software unit from its data storage software business.

HP, eBay and Symantec are all splitting up into smaller, more-focused companies in order to compete with younger competitors.

An activist shareholder is calling for EMC Corp. to give up control of Palo Alto-based VMware Corp.
And an analyst has suggested that it’s also time for San Jose-based Cisco Systems Inc., to separate its businesses.
“Developments speak to the growing pressures/growth challenges that mature technology stalwarts ... are facing in today’s evolving technology landscape,” Daniel Ives, an analyst at FBR Capital Markets, said in a report.
Rapid adoption of mobile, the cloud and Big Data analysis are causing an unprecedented wave of separations at some of the most powerful companies in Silicon Valley and the world.
Collectively, the companies that have announced breakups — or are being pressed to take drastic action — employ more than 30,000 people in Silicon Valley.
The 2014 wave of breakups will ripple through Silicon Valley’s workforce and its commercial real estate scene — as well as global capital markets. In one sense, it reflects a healthy economy, with even lumbering giants like Hewlett-Packard Co. showing enough agility to attempt massive change. In another sense, it poses the ultimate challenge for the corporations that form the backbone of the tech economy: How to survive over long periods of time in the face of tectonic technological change.
Along the way, rest assured of one thing: The executives who engineer Silicon Valley’s splits are likely to walk away far wealthier than they would have otherwise — and the bankers who execute the divorces are in for a fee bonanza.

The HP Way
Hewlett-Packard, which employs 5,000 workers in Silicon Valley, is so representative of Silicon Valley’s business culture that the garage where it was born is a state historical landmark, so it embodies something of the other companies on the rocks.
“All of them are facing declines in their main markets and the central question is, how do they get growth?” said Prof. Charles O’Reilly of Stanford’s Graduate School of Business.
HP answered that question successfully several times in its 75-year history, shifting from instruments to minicomputers and then on to printers and PCs.
This came from an organization in which each division was responsible for both the mature products and coming up with new ideas in growth areas. “There was an immense amount of innovation,” O’Reilly said.
All of that ended under CEOs Carly Fiorina and Mark Hurd, who tightened up the organization and drove costs down — in part by strangling funding of research and development. While that helped them to excel at PCs and printers, it blinded them to the big shifts to tablets, smartphones and the cloud.
“Now they are basically a decade behind on key innovations and have lost the engine that allowed them to remain competitive,” O’Reilly said.
If HP’s plan fails and this icon of the Valley vanishes, chances are the emotional impact will be greater than the economic toll. That’s because its rivals are similarly heavily invested in the Bay Area, including Dell, IBM and other breakup candidates like EMC and Cisco.

Unlocking ‘shareholder value’
Angelo Zino, an analyst who follows HP and EMC at S&P Capital IQ, says his firm has strong “buy” recommendations on both stocks because they are undervalued and big companies with slow growth are looking for strategic ways to extract shareholder value.
That can mean breaking up the company, selling off assets or merging with another company, something that the Wall Street Journal reported that EMC and HP each discussed and rejected.
Those talks came over the summer after EMC came under breakup pressure from activist shareholder Elliott Management Corp., one of a group of such investment protagonists that have reportedly built up a collective war chest of about $111 billion.
Elliott wants EMC to break up its so-called “federation” of three businesses — EMC’s core storage and security business, virtualization pioneer VMware and cloud computing software developer Pivotal.
CEO Joe Tucci doesn’t like the idea, telling Bloomberg, “If you break it up, you just weaken every part. So I just think it’s better together.”
If EMC, which has 2,900 employees in Silicon Valley, fails, it could have a net positive impact on Silicon Valley. That’s because the businesses of its two forward-looking tech units, VMware and Pivotal, are based here and presumably could grow, with or without EMC. Moreover, many of the upstarts challenging EMC’s core business, like Pure Storage and Nimble Storage, would benefit.

Cisco situation
Cisco, the region’s second-biggest tech employer with 15,633 local workers, doesn’t have an activist angling at it, yet, but at least one analyst thinks it should.
Mark Sue of RBC Capital Markets, after the HP news broke, said the San Jose company could break off what he calls “Cisco Solutions” — its mature networking equipment business — from a riskier innovation business he calls “Cisco Cloud.”
“Cisco Cloud could pursue bold deals to acquire early stage tech companies and invest in R&D to drive growth from new technologies and solutions without concerns about cannibalizing Cisco’s legacy platforms,” he wrote.
But another analyst, Amitabh Passi of UBS, said a Cisco breakup doesn’t make sense for much the same reason Tucci has to not want to bust EMC apart.
“Sure, different businesses have different growth profiles, but we don’t see a compelling case to break apart the company when there are cross-selling and synergistic advantages,” he said.
Stanford professor O’Reilly, though, said Cisco may need to do something to jump start innovation. It tried something in 2007 it called “boards and councils” which tasked leaders of business units with generating new ideas that could become $1 billion businesses. That led to the push into consumer lines like the once-popular — but doomed — Flip camera. The idea was tossed in 2011.
“They screwed that one up,” O’Reilly said.
As with EMC, bad news for Cisco could be good news for others in the Valley, like its software-defined networking challengers PLUMgrid in Sunnyvale and Big Switch Networks in Santa Clara.

Undoing EBay’s PayPal acquisition
EBay, with 4,700 workers in San Jose, is another company that missed opportunities to innovate with its PayPal unit, according to one of the payments company’s original executives, Keith Rabois.
“PayPal has missed the last decade in the United States,” he said on Bloomberg TV. “In the United States, there has been an incredible innovation in payments over the last decade and PayPal hasn’t participated in any of it, whether it’s Square or Stripe, Braintree — which they had to acquire — Bitcoin, and the derivative consequences of Bitcoin.”
Rabois and other members of the “PayPal mafia” applauded eBay CEO John Donahoe’s decision late last month to do the spinoff that activist investor Carl Icahn had pushed for earlier in the year.
It was a move that caught many by surprise because Icahn had ended his proxy fight months before.
“We put a list of New Year predictions together every year and eBay spinning off PayPal was on there for a few years,” said Scott Kessler of S&P Capital IQ. “If you separate these businesses, they will become more focused and more innovative. You probably create better opportunities to create more value.”
EBay’s marketplace business is facing a potential challenge from Alibaba Group Holding Ltd., its much bigger Chinese counterpart, which just raised $25 billion in a historic IPO. That means that shrinkage at eBay may not send talent or resources directly to a local competitor.
But if PayPal falters, chances are that electronics payments groups at Google Inc., Apple Inc., Square or another local payment tech startup will arise to supplant it.

Symantec’s solution
Symantec Corp., which employs about 3,000 in Mountain View, is the latest big Valley tech name to announce a breakup.
It unveiled its plans on Thursday to separate its legacy data security business from the data storage software business it bought when it paid $13.5 billion for Veritas Software in 2004.
Slumping PC sales have cut the need for Symantec’s antivirus software but, as with Cisco, analysts are divided on the wisdom of the move.
Richard Williams of Summit Research in a note to shareholders written before the split was announced said he thinks it is a good idea: “In this case both Symantec (the security software company) and the erstwhile Veritas were viable businesses on their own.”
Also writing before the announcement, Kevin Buttigieg of MKM Partners wasn’t so sure, saying the move won’t help growth and operating margins and it’s not clear who the buyers of either unit might be.

 “A break-up could be potentially very disruptive,” he wrote. “Following the acquisition of the storage business with Veritas Software, Symantec missed several quarters while consolidating back- and front-office functions in an effort to drive greater efficiencies.”
That kind of reasoning perks the ears of shareholders and activist investors circling Silicon Valley companies. With the split-ups of HP and eBay already announced, and the potential for more, 2014 is poised to become a signal year in the region’s business history.
And while the gyrations that the companies — and their employees — go through may cause discomfort, think of it as growing pains for Silicon Valley. 

Article and Photo Sourced From:  http://www.bizjournals.com/sanjose/print-edition/2014/10/10/hp-ebay-and-now-symantec-welcome-to-splitsville.html?s=image_gallery

Bay Area Job, Population Growth Will Continue to Fuel Housing Demand

The Bay Area’s tech-industry-driven economy continues to add extremely desirable and high-paying jobs, attracting talented workers from around the nation and globe. But even though our region’s phenomenal economic growth likely will begin to slow over the next couple of years, intense demand for housing is almost certainly here to stay thanks to a pronounced lack of available homes.

“We’re getting closer to full employment,” says Stephen Levy, director and senior economist of Palo Alto-based Center for Continuing Study of the California Economy. “And what that means is that as we near full employment, that’s going to bring in people, which will add to the housing demand.”

May statistics from the California Employment Development Department show that each one of our Bay Area counties boasts an unemployment rate lower than the statewide average of 7.6 percent. Job growth remains particularly strong in Marin, Napa, San Francisco, and San Mateo counties, all of which have unemployment rates of less than 5 percent.

Levy believes that the Bay Area’s unemployment rate will never return to dot-com-era lows, when it hovered in the 2 to 3 percent range in San Francisco and Silicon Valley. However, he forecasts that even though job growth will level off over the next two years, the Bay Area will continue to outperform the rest of the country.

Population Growth Outpacing New Housing in Key Markets

Since the U.S. began to emerge from the Great Recession in 2010, the Bay Area’s population rate has jumped sizably, according to California Department of Finance data. Over the past four years, the number of residents in San Francisco and San Mateo counties has grown by nearly 4 percent while increasing by almost 5 percent in Santa Clara County.

But those counties have failed to build enough new housing units to keep up with the expanding populace. Since 2010, new housing has grown by just 2 percent in Santa Clara County, 1.3 percent in San Francisco, and 0.9 percent in San Mateo County.

“Peninsula prices and rents will continue to outpace the state and national average unless we see a dramatic increase in supply, and even then it would be snapped up pretty quickly,” Levy says.

Economic Climate Much More Stable Than in Dot-Com Days

As was the case in the dot-com boom and subsequent bust, the tech industry remains the primary driver of Bay Area employment growth. However, Levy believes that our current economy is far less frenetic than it was 15 years ago.

“I think it’s quite different,” he says. “These are real companies, and they have customers, profits, and burgeoning sales. The dot-com era was more about business plans.”

Still, technology companies aren’t the only businesses fueling Bay Area job growth. Other industries, including hospitality, health care, and construction, are seeing employment upticks, Levy says. However, he cautions that tremendous growth in the Internet sector could eventually slow expansion in other industries, including brick-and-mortar retail and financial services.

While the Bay Area’s economic outlook appears solid for the foreseeable future, the housing shortage may eventually impede growth, as workers could become wary of relocating to an area where finding a home is so difficult. Therefore, new construction remains a crucial factor in keeping our region’s economy moving upward and onward.

“I think [our economy] will always grow, but absolutely, housing poses a constraint to our growth over the long term,” Levy says. “The lack of housing could take some of the bloom off of the rose and limit some of the growth that might otherwise be there.”

(Photo: Flickr/Thomas Hawk)

SpotOn lets people rent out unused space for parking

Aaron Strick, logistics manager for SpotOn Parking, demonstrates the app that lets people rent out unused spaces. Photo: Michael Macor, The Chronicle

David Kim needed a place in San Francisco to park the six cars he lists on RelayRides, an Airbnb-type service that lets people rent their personal autos to others over the Internet.

So it was only natural that he made a deal with SpotOn Parking, which lets San Francisco homeowners and businesses rent out their driveways, garages and parking lots when not in use.

SpotOn says it is different from apps that help drivers find spots on the street or in garages because it is trying to increase the supply of parking in the city.

"We have three sources of inventory," says Hanna Bui, who was a technology lawyer before starting SpotOn last year.

One is homeowners who rent out their driveways or garages.

Another is commercial lots that normally close at night because no attendant is on duty.

The biggest is businesses, churches, schools and other establishments that rent out their lots when not in use.

Preston Turner, chairman of the board at Third Baptist Church in San Francisco, works with the SpotOn app to rent out the church's overflow parking area when it's not needed for services or other events. Photo: Michael Macor, The Chronicle 

 

Nate Hernandez, with the SpotOn sales department, posts a sign near the Third Baptist Church lot. Photo: Michael Macor, The Chronicle

SpotOn has access to more than 500 spaces in San Francisco, Bui says.

There are two payment models. With the hourly model, drivers use a smartphone app to find an empty spot, check in, check out and pay with their credit card. The price is usually $2.50 to $3.50 per hour with a $10 to $12 maximum for 12 hours.

With an "all you can park" subscription, drivers pay a monthly fee for a guaranteed spot near their home or office, although it might not be the same spot every time.

The monthly fee varies by neighborhood and ranges from $150 in the Mission District to $400 in North Beach. Subscribers can use any other SpotOn space for free when they are out and about.

The company generally takes a 30 percent cut of parking revenue.
City regulations



SpotOn has yet to deal with San Francisco's permit regulations or 25 percent parking tax. The company is working on that, says Bui.

Carrie Busch stumbled upon SpotOn when she was taking her stepsons trick-or-treating at Fair Oaks, a Halloween hotspot. "There was no way I was going to get parking there," she says. "I saw a sign for SpotOn at a church. I downloaded the app and paid $2.50 to park. It saved my life."

Since then she has used SpotOn once every week or two, usually when she visits the Mission on a Saturday night.

Kim uses the subscription model. He pays a flat $500 a month for a place in North Beach plus space for his rental fleet on the Third Baptist Church parking lot in the Western Addition.

Kim says he didn't need, and couldn't afford, six full-time spots for his cars. "They usually get rented out two-thirds of the month," he says. The downside is that he must find other parking when the church has services, funerals or other events.

Bui says Kim got a good deal because he's a RelayRides renter and SpotOn wants more of them.

Third Baptist makes about 40 spaces available to SpotOn, says Preston Turner, chairman of the church board. He says the program "has been a win-win for our neighbors and our church." The "donations" from renters help fund church programs. More importantly, the church is "networking and building a rapport" with people who might never come through its doors.

Down the street from Third Baptist, the Jerusalem Church of God in Christ rents about 22 spaces through SpotOn and receives about $1,700 a month from the service. "I don't think God has called us to be a parking lot," pastor Scott Galbraith says, but "it underwrites a lot of what we are doing." Plus it's a lot easier than holding "cakewalks, chicken dinners, candy sales."

Of course, no good deed in San Francisco goes unpunished.

The city has strict laws governing parking lot operators. "Operators have to get a police permit, get a bond; it's highly regulated," says Greg Kato, policy and legislative manager for the Office of the Treasurer-Tax Collector.



Article & Photos Sourced From: http://www.sfgate.com/business/networth/article/SpotOn-lets-people-rent-out-unused-space-for-5468453.php#photo-6275399

Apple donates $500,000 to Silicon Valley anti-poverty group

The tech giant has teamed up with Google, LinkedIn, and others in an effort to fight poverty during a time of rising tensions in Silicon Valley.








FORTUNE -- Apple (AAPL), the world's most valuable tech company, has donated $500,000 to the anti-poverty initiative SF Gives, Fortune has learned from two sources familiar with the matter.

The Cupertino, Calif.-based tech giant joins a list of 15 corporate contributors that includes Google (GOOG), LinkedIn (LNKD), and Zynga (ZNGA). Launched in early March, SF Gives is the brainchild of Salesforce.com (CRM) CEO Marc Benioff and Daniel Lurie, CEO of the nonprofit Tipping Point. The goal: have 20 businesses contribute $500,000 each, or $10 million total, to fund local charitable programs.

The arrival of an initiative like SF Gives comes at a precarious time for Silicon Valley. Critics of the thriving tech industry have blamed companies for a meteoric rise in rents and increased evictions. In recent months, protesters have blocked Google's employee commuter buses, held a rally at the annual Crunchies tech awards gala, and stood outside the San Francisco home of Google Ventures partner Kevin Rose, distributing flyers and holding signs maligning Rose as a "parasite" and "leech." Many people also complain about the tech industry's limited track record in philanthropy, despite the huge profits generated by some of its biggest names.

For the most part, signing up high-profile tech companies hasn't presented a huge challenge thanks to Benioff and Lurie's Silicon Valley connections. Still, while SF Gives is close to hitting the $10 million mark by its Wednesday deadline, 10 or so companies have declined to chip in. According to Lurie, their reasons vary. "For some, they feel like they're doing their own thing: They're giving back [already], and they're involved," he says. Other companies don't generate revenue and feel it's inappropriate to give away their investors' money. "Then, there are others who just fundamentally believe that a company shouldn't be doing philanthropy and that individuals should do it," Lurie says.

SF Gives wouldn't be the first time Apple has made a charitable contribution. The company has given $70 million to The Global Fund to Fight AIDS, Tuberculosis and Malaria, raised from the sale of (PRODUCT) RED-themed devices and donated tens of millions to Stanford hospitals. Apple declined to comment about its donation to SF Gives.

From Lurie's perspective, local tech businesses that are transforming the Bay Area's financial and demographic landscape have a responsibility to improve the lives of everyone in the community. Many companies, like the ones contributing to SF Gives, are excited to close what he calls an "opportunity gap" for the 1.3 million Bay Area locals currently living below the poverty line, he says. Each company that makes a donation to his organization can appoint an employee to a kitchen cabinet of directors that will decide which programs to fund.

While SF Gives is predicated on the idea of giving back to the community, it could also help rehabilitate Silicon Valley's reputation with local residents who are critical of the tech industry and its limited track record of philanthropy. Adds Lurie: "We'll win some people over, and some we won't. But it won't stop us from continuing to push."

article and photos sourced from:  http://tech.fortune.cnn.com/2014/05/05/apple-donates-antipoverty/