The Meg Whitman Hire: Another HP Misstep?

If you are unaware:

Hewlett Packard, the struggling technology giant, has named Meg Whitman as the new CEO of the company.

HP has come under fire for making the hire so hastily:

Swapping Apotheker, who has now been ousted from two high-profile CEO jobs in two years, for Whitman is a decision designed to stem investor fury over a series of questionable strategy moves.

Analysts are worried about Whitman's technology experience. It seems like HP has struggled because it has fallen behind in the ever evolving technology sector and bringing in a candidate that does not fit into that mold can be concerning:

“Our concern would be that she doesn’t have a lot of enterprise and technology experience,” said Jayson Noland, a tech analyst at Robert W. Baird & Co. told the Post. “She’s not the most obvious choice to me.”

HP has vehemently defended the hire:

"If we thought there was a better choice outside, we would have conducted the search," Mr. Lane said.

Lane has heaped even more praise on Whitman:

In response to doubts about Ms. Whitman’s qualifications to run H-P, Ray Lane compares Meg Whitman to Ronald Reagan! He says “Ronald Reagan was an actor. He turned out to be a pretty good president.”

These are probably attempts to appease shareholders. HP stock has dropped off since the announcement was made:

Bernstein is not impressed:

The Street is duly unimpressed with Whitman's appointment:

Scott McNealy, former CEO of Sun Microsystems, is a Meg Whitman fan and says she's a good fit for HP:

“I am a big fan of Meg Whitman and she surrounds herself with good people,” said McNealy in a phone interview. He argued that she will bring much-needed stability. “I am bullish on Meg, but not bullish on how HP got there.”

He's not worried about her familiarity with tech either:

“She understands tech, even though she didn’t come from the computer industry. Heck, even Lou Gerstner (ex-CEO of IBM) didn’t come from the computer business.”

I'm not convinced by Whitman. I see that she did a great job with EBay, but I don't know if she can do the same with HP. They are in different businesses. From what I've seen, it seems like she is the flashy hire. I think the board is banking on her name brand appeal to make up for some of what they've lost in the last year in terms of credibility. However, what would have restored credibility in the best way was hiring the best candidate to lead HP. Now, Whitman could turn this ship around. Regardless, I feel HP could have been more thorough in finding a new CEO.

Santorum's Loaded Gun

When I heard him talk about this last night, I wasn't sure he understood how what he was saying was coming across. He keeps referring to it as "sex" but I thought he meant to say "sexual orientation" given the context of what he was saying.

A gay rights group is not happy:

GOProud said in a statement that Santorum "disrespected" men and women in uniform with his response to Stephen Hill's question about whether any of the presidential candidates would "circumvent" the repeal of the "don't ask, don't tell" policy.

He seems to be the only one that's still against DADT:

What's remarkable about Santorum's position on "don't ask, don't tell" -- which formally ended this past week -- is not necessarily his keenness to judge the post-DADT environment for formerly closeted soldiers. It's that, on this matter at least, he is increasingly the lone culture warrior in the GOP presidential field. Following the debate, no other candidate or campaign offered support for a reinstitution of the law.

Herman Cain said this:

On a personal level, Cain added: "I have no problem with [gays serving openly]. The first order of business should be to do their job. As long as they do their jobs I think people in the military will be fine with that. It is when it becomes a distraction and you have got to spend a lot of time creating special situations, this is what I disagree with."

The bottom line is this:

“That brave gay soldier is doing something Rick Santorum has never done -- put his life on the line to defend our freedoms and our way of life,” the group said in a statement attributed to Christopher R. Barron, the group’s chairman of the board, and Jimmy LaSalvia, its executive director. “It is telling that Rick Santorum is so blinded by his anti-gay bigotry that he couldn't even bring himself to thank that gay soldier for his service. Stephen Hill is serving our country in Iraq, fighting a war Senator Santorum says he supports. How can Senator Santorum claim to support this war if he doesn't support the brave men and women who are fighting it?”

Santorum has tried to paint himself as the top supporter of the military in this race. He had to differentiate himself from the rest of the candidates. However, as he fired that gun, it appears the recoil has caused him to hit himself in the face. I still think he somewhat misspoke, but you have to watch what you say in the public setting and you can't be as aggressive as he was in trying to take a stand when you're not sure of your words.

Stuttering Perry

When I first heard Rick Perry declare his candidacy, I was excited. It meant new blood in the race; someone different who could inject life into the GOP. The more I've seen of him, the more I am unimpressed with him as a person and as a leader.

I'm not the only one that think so:

While he established himself as the frontrunner, those days were numbered as he quickly has lost ground as a result of the last two debates. I can't really explain it because he has a good enough record where he really has a chance. Time and time again he seems unprepared in the debates. He's getting hammered on Social Security. He's getting hammered on crony capitalism. He's getting hammered on immigration. If he had been prepared, he would withstand the attacks, but he's just taking the hit. He's campaign has taken a hit.

He can't even attack an opponent right now:

The most telling moment Thursday evening was a botched attack on top rival Mitt Romney for Romney’s move during his political career toward more conservative stances in a number of issues, an attack that obviously had been readied in advance.

But Perry blew the delivery, offering instead a muddled stew of lines about Romney’s positions on abortion and healthcare, leaving the audience at the Fox News/Google debate in Orlando, Fla., and the audience at home unsure where Romney stood now or Romney stood then. (Of course, Romney’s critics would maintain that has always been the case.) It allowed Romney to close his portion of the debate decisively, while making a case that Perry didn’t seem to have a grasp of the issues.

The lack of preparation has reflected poorly on him. It would be easy to compare him George W. Bush, but that might be unfair to Bush at this point. Perry is just weak:

Perry arguably let Santorum push him around on border issues, as well, where Perry’s expertise should be unchallenged. Instead, Santorum hammered Perry on providing college tuition aid to the children of illegal immigrants and mocked him on border security. In another answer, Perry misspoke, saying Medicaid when he meant Medicare.

May be debating is just not his thing. However, as a President, you need to be multidimensional. There's also the fact that Perry has repeatedly stated that he wants to have a conversation on the issues, yet in the debates, he has repeatedly shied away from such discussion.

Don't even get me started on that smile.

But that has more with the "look," which when all is said and done isn't important if a man (or woman) is capable. However, if a man is capable, he most certainly look Presidential, right? It's the stupidest thing to judge a potential President on looks, but people do do it. But is this a Presidential look?

The aura of that first speech is lost. This is no secret:

When former senator Rick Santorum started to push Perry on his illegal immigration record, Perry made the mistake of asking Santorum whether he had been to the border. Of course, the former two-term senator has. Lots of members of Congress have. (And you don’t ask questions like that unless you’ve got a pretty good idea about the answer.)

That was symptomatic of Perry’s problems Thursday night. While he tried to recover from the attacks on himself by leveling his own attacks on the other candidates — mostly Mitt Romney, of course — he showed himself to be pretty inept at the art of the attack.

Whether or not debate is an important part of being president, it will be an important part of the election. If he does get past the attacks from Romney, Bachmann, Santorum, and the rest of the GOP Presidential hopefuls, he will have to go toe-to-toe with Obama. Now, that might be easier considering Obama has struggled on issues which Perry has succeeded. However, Obama has already once been elected President. He can do it again.

Perry needs to step up his game, or step down from his candidacy.

Education Issues

So I've long lambasted the weakness of the United States education system. I've been particularly disappointed with the lack of science and math education. Today, I read an interesting op-ed by the former CEO of Lockheed Martin:

With all the talk of America's very real weaknesses in the STEM subjects (science, technology, engineering and math), you might be surprised to learn that the answer—according to the federal government's National Assessment of Educational Progress—is neither science nor math. And despite what might be suggested by the number of underwater home loans, high-school seniors actually fare best in economics.

Which leaves history as the answer, the subject in which students perform the most poorly. It's a result that puts American employers and America's freedoms in a worrisome spot.

Mr. Augustine goes onto say:

In my position as CEO of a firm employing over 80,000 engineers, I can testify that most were excellent engineers—but the factor that most distinguished those who advanced in the organization was the ability to think broadly and read and write clearly.

When we think about education reform, we should not limit our thinking to what aspects need to be improved, but rather, how to improve the whole. Being able to think is probably one of the biggest drags on students today. The skills you obtain from studying one subject can pay dividends to learning other subjects.

How do you improve the educational system though? Is there one way? Probably not. We live in a diverse country with diverse challenges. In Florida, there was a method that worked.

In an article praising a Bush, they say education should be left to the states:

“By federalizing education policy you create resistance at the classroom, school, school district -- and even the state level,” he told the Harvard Political Review earlier this year. “I think you’re getting more dynamic results by having the states play the policy role and holding local school districts accountable for actual learning.”

The state of Florida's educational system was not succeeding:

In 1998, Florida’s public educational system was ranked among the worst in the nation. Its high school graduation rate was an appalling 52 percent; 47 percent of its fourth-graders were functionally illiterate, according to nationally administered tests. To address this crisis, the state had adopted a rigorous set of criteria for each grade called the Sunshine State Standards, and established a system of tests, the Florida Comprehensive Achievement Test (FCAT), administered to fourth-, fifth-, eighth- and 10th-graders to see if students were living up to them.

What did Jeb Bush do? Reform, spend, improve:

Their first major legislative initiative, passed swiftly by the Florida legislature, was called the Florida A-Plus Plan. It’s primary features included the following four provisions: Making the FCAT an annual exercise so that each student is tested each year; assign letter grades, A through F, to every school in the state based on academic performance; requiring D and F schools to produce a detailed plan to improve performance -- and providing state money to help; and allowing students from chronically underperforming schools the option of transferring to any public school in their district, or an adjacent district, or even attending a private school at state expense.

And merit-based pay:

Bush and his team followed up in subsequent years with a plethora of other innovations. These included the always-controversial merit pay to retain the best teachers; changes in teacher certification procedures designed to attract instructors with a high grasp of the subject material (especially in math); ending “social promotions,” especially from third grade to fourth; and subsidizing PSAT tests for high school students from needy families. A third wave of policies expanded scholarships for needy kids, funded charter schools and “virtual” schools, and opened a number of pre-kindergartens programs across the state.

Bush saw success even in underrepresented minorities. This was a tremendous accomplishment.

Florida is a unique example, but it's not one that should be ignored. They did a lot of things I would agree with such as incentivizing schools to do better and to provide students and their families with options. For far too long, public education has been what is offered. It is time to let the people have the choice. This should paint a clearer picture to what works and what does not.

Defending Romney

Mitt Romney continues to get attacked over his lackluster jobs record as governor. From a pure numbers perspective, he probably should be bashed. However, when you consider what he did compared to his predecessors and his successors, he looks favorabley compared to someone like Rick Perry:

Romney was right. Employment numbers from the Bureau of Labor Statistics show that the number of jobs in Texas grew nearly 3 percent annually while Ann Richards was governor and about 5 percent per year under Bush. Over Perry's 11 years as governor, job growth has averaged less than 2 percent per year.

With the favorable jobs market of Texas, Perry's growth rate has lagged behind both Bush and Richards. What does that say about Perry? As governor, Romney was in charge of turning around Massachusetts. He did it with a democratic legislature, something that Perry hasn't had to deal with. He had to deal with a bad credit rating, which he helped improve. He had to deal with the democratic healthcare legislation, which now ironically bare his name, RomneyCare. All of the potential issues that a future President of the United States is going to deal with, Romney has already faced.

Despite challenges, Romney produced results. Were they the best results in the country? Absolutely not. But given the circumstances, Romney was an effective governor.

Attacking Obama

Rick Perry released his first ad:

Ripping Obama and attacking the state of the nation. The visuals are moving. I would have gone for a more subtle jab:

I would have done a take of the iconic Shepard Fairey print of Obama, except, of course, with the zero for his zero job growth in August.

Yeah I've Got To: Conference Alignment

So you're sitting at home, reading sports news, you see all these schools desperate to join all these conference, but you don't see the Big Ten mentioned at all. Instantly, you panic. What the hell is going on? Why are we sitting back and doing nothing? Why aren't we going after these schools?

Well, do we really need to?

From a Big Ten and Michigan standpoint, not really:

The Big Ten has the three most popular teams in college football, so they can afford to wait as far as conference realignment goes. It doesn't make sense for them to go after schools left and right, when they already have a good base. Everyone says to go after Notre Dame and Texas, but if you're going to expand, it's going to be an even number of schools. Additionally, it's going to lead to more of a split if you do bring in more schools in terms of TV revenue. I don't think it makes sense for Notre Dame or Texas to come to the Big Ten at the moment, nor does it make sense for us to take them on.

If you really do want to expand, it's all about strategy. The crown jewel of college sports, despite the fact that it's not as big a college football market as one thinks is New York. Everyone wants into New York. So what about New York?

The Big Ten already has 3 of the top 10 most popular teams in New York. I really think they'll only benefit if they bring in a Notre Dame or a Rutgers if they want to expand. Rutgers might not be worth it because the increase in subscriptions might be offset by the fact that there is another mouth to feed. Notre Dame really is the only one that makes sense from a competitive and financial perspective. The problem is that they won't want to come to the Big Ten if they come in because of their current deal with NBC.

They're not Michigan, they're not Ohio State, and they're not Penn State.

I don't think I want the Big Ten to expand otherwise. Brian Bennett of ESPN spells it out. It doesn't make sense for the Big Ten to take on Missouri or Kansas for the sake of expansion. They don't bring anything to the table in terms of competition or financial benefits, but they're AAU schools which fit in if there is expansion.

Honestly, the Big Ten is in good shape. They got a good school in Nebraska that actually brings something to the table. They might miss out on Texas and Notre Dame, but neither schools would want to fit into the Big Ten when you look at the Big Ten Network. With all the expansion, everyone wants the Big Ten to get in on it too, but I believe staying true and keeping things the way they are might be the best thing to do.

Right now, the Big Ten has a great TV deal and a great network that does well to give exposure to all the schools. They already have some great brand names under their moniker. There is no need to try and bring more mouths under their roof at the moment. Even with all of this expansion, the Big Ten will continue to thrive in its current state.

Netflix: Flirting With Disaster?

A couple months ago, Netflix took flack for raising their prices for their subscription services. While they took heat, the company raised prices to deal with the growing cost of increasing the content available for their customers. It was a necessary move to grow the business.

Yesterday, Netflix announced that it was separating its DVD-by-mail services and its Internet movie-streaming service:

In his overnight email to the company's 23 million domestic subscribers, Mr. Hastings said the DVD business will be renamed Qwikster, hived off into a separate subsidiary that will have its own billing system, website and list of movies.

Now, I think that the DVD business is becoming somewhat archaic as we move towards a more digital world with cloud computing becoming more prevalent. With that said, there is still a demand for it, and I don't see that separating the businesses is a smart idea. It would be, if the customers were mutually exclusive in terms of online streamers versus DVD renters. This does not appear to be the case.

The outrage was immediate, as more than 16,000 users responded on Netflix's blog:

"You are making things significantly worse for us," one customer wrote, in a screed that echoed many of the others. "Now not only will we have to pay a LOT more for your services, but we will also have to access two separate websites."

Netflix is taking a long-term view, and as a result, they are taking a short-term drubbing. This is taking place both from their customers and their investors. Let's look at their customers first:

But what sealed the deal was Sunday night's so-called apology -- your mea culpa for the price hike. But you don't rescind the price hike?! Even worse, you announce proudly that you're creating an entirely new service to handle the DVD mail business, Qwikster?

So now, I have to go to one site to see if a movie is streaming, and if not, go to another site to put it in my by-mail queue to wait for a hard disc.

It's clear you don't care about keeping me happy, like you once did. I don't feel so proud being caught with that little red envelope anymore.

Clearly, these decisions were driven by what the company sees for the business. While it does make long-term sense, I think they're underestimating the good will they had generated for the brand by being the people's DVD and online streaming company. Now they're in hot water. The investors are getting out:

After a tremendous rally, that even my dad took note of and lamented not getting in on, the company has taken a huge hit over the last month. Even though the market as a whole has taken a hit, it certainly has not taken as big a hit as Netflix. The company has lost more than half of its shareholder equity in the last two months.

For me, the number one thing about business is knowing how customers are going to react to your business decisions. It is this understanding that shows that a company will succeed. You look at Apple and you see how a company with a strong understanding of its consumer has succeeded. Netflix has demonstrated an increasingly poor understanding of its consumer's needs and stands to suffer as a result.

While I strongly agree that the streaming business is the future, I think neglecting or complicating the DVD business is a poor decision. One of the main influences of technology has been to consolidate business activity. This is doing the exact opposite. While it may help Netflix tackle the content gap in the streaming business by separating the two businesses, this could have been executed much better. Additionally, I would have to question the timing, given the bad publicity that the price hikes garnered.

Time will tell whether Netflix will remain a strong company, but at the moment, you cannot like the direction it is going as a consumer and/or an investor.

The Problem With Government

So I've been ripping Obama for trying to use Keynesian measures to help us get out of this recession. The problem for me is that government spending will lead to government reliance. You don't have to look far to see the potential problem that may develop. Greece continues to have trouble getting their citizens off the government's teat:

But others entertain strong doubts about the willingness and ability of the Greek political class to implement the structural measures that will improve the performance of the Greek economy. "The present government has done absolutely nothing during the last 12 months to speed up privatizations, reduce the public sector or open up closed professions," Athanasios Papandropoulos, a leading economic analyst, told me recently in an interview. "In these 12 months it has not fired even one civil servant. The only thing it is doing is trying to tax the private sector out of existence. Why should we believe that they will do something different now?"

Government reliance has changed the expectancy of the citizens. They don't believe the government is going to change:

Structural reforms have been repeatedly announced by Greek officials during the past. Yet nothing has happened. Greece's plans tend to resemble Soviet Five Year Plans: They look good on paper but have absolutely no bearing on reality. Anyone in the government who tries to point this out is forced to resign. Economist Stella Balfousia, the head of the Greek Parliament budget office, had to tender her resignation after her office published a report contradicting the government's official forecasts on debt and deficit.

While I don't think the US is going to be Greece, I do think we need to limit the influence of the public sector. There are many roles the public sector can play, but being the primary provider of jobs is not one of them. That should be left to the private sector. This is why I've had such a problem with the plans that Obama has put out there. I don't want to see US start to stutter; I want to see the US continue to grow.