Friday’s Reflections, With Feeling

Today I give a two-part offering for your reading pleasure, plus a little extra tacked on at the end so that we start the weekend on the right note.

Under Pressure at HPE

First up is news from Hewlett-Packard Enterprise (HPE), which released results for its second fiscal quarter. Fortunately, the results were an improvement on those HPE delivered in the preceding quarter. Even so, HPE’s server business, which provides a significant portion of the company’s revenues, remains embattled, under siege from competitors and its own operational missteps.

To complicate matters, we learned in April that Elliott Management, euphemistically described as an activist investor, has accrued shares of HPE valued at more than $1.5 billion.

For CEOs, to discover that Elliott has taken a meaningful stake in your company is akin to being a suburbanite who learns that Freddy Krueger has just moved into your neighborhood. From a Reuters article on Elliott’s interest in HPE:

One hallmark of Elliott's campaigns has been to work with boards to find new management at companies that have been underperforming. Since 2022, 14 CEOs have left their positions at companies in which Elliott owned a stake, a person familiar with the matter said.

True to form — we can count on Elliott Management for predictability in uncertain times — the CEO-toppling firm, after declaring its investment in HPE, wrote to HPE’s board to demand the defenestration of the chief executive.

So spare a thought for Antonio Neri, HPE’s CEO. The big chair is getting hotter in the corner office, and he can be excused for turning up the air conditioning.

One intractable problem for Neri is HPE’s pending acquisition of Juniper Networks. It was a presumably cold day in January 2024 when HPE announced its intent to acquire Juniper Networks for approximately $14 billion.

Alas, announcing a deal is not the same as consummating the transaction. Here we are, 18 months later, and HPE’s Juniper deal remains aspirational, held up by a Department of Justice (DOJ) objection. The DoJ’s opposition is motivated primarily by concerns regarding potential lack of choice and diminished innovation that might ensue in the wireless-LAN market should the transaction be completed. Many observers, including this one, think the DoJ’s concerns are unwarranted, but what I think, while interesting to me and maybe to you, is entirely irrelevant to the legal proceedings.

Always Have a Plan B

What will the courts decide? If I knew the answer to that question, I’d make a fortune on the futures market. Other people will make predictions about the resolution of the pending HPE-Juniper deal, but unless those people are adjudicating the case, and the judgment is about to be rendered, their opinions are no more than informed (well, sometimes) speculation. Such conjecture isn’t necessarily bad, and it can even be fun, but it has a lot in common with hope, in that it does not in any way contribute to a viable strategy.

Whatever the court decides, HPE must abide by the verdict. For a long while, even after the DoJ signaled its concerns and opposition to the deal, Neri remained outwardly confident that the Juniper acquisition was an assured outcome. Such posturing is fine, entirely expected. HPE pursued the deal, so you’d expect its executives to have the courage of their convictions. Still, what one says publicly might differ from what one thinks privately, and I presume that Neri and the HPE braintrust were devising contingency plans just in case the deal gets scuppered.

Neri is now publicly conceding that the acquisition might not happen. I’ll explain why, but first here’s an excerpt from an article published this week at SDxCentral:

When pressed on the Juniper Networks issue, Neri did acknowledge that in conjunction with HPE’s board, there has been “an ongoing dialogue on a range of issues and opportunities,” and that “we value the constructive input from all of them.”
In the same breath, Neri did attempt to fortify HPE’s financial position behind the deal by stating it’s “the fastest path to increase in our shareholder value,” and re-iterating an expected $450 million in annual run rate synergies from the acquisition within 36 months of close. But Neri also admitted that HPE is ready in case the deal falls apart.
“We also have seen and explore a number of other options if the Juniper deal doesn't happen, and that’s inclusive of capital return and other portfolio actions,” Neri said. “But we are not going to discuss those until we see the outcome of the Juniper transaction. … We are within 5 weeks of the trial, and we hope to get that resolved and start the integration of the asset.”

So, why make the public case for strategic contingencies now? I think the answer involves the pressure coming from Elliott, but with a twist.

Given that Elliott already drafted and submitted a letter to the HPE board demanding Neri’s removal, the CEO probably recognizes the futility of any attempt to redeem that relationship. Elliott, not known for boardroom retreats, has already plumped for a new CEO. Consequently, Neri’s focus is on major institutional investors at HPE. If he can retain or win their affections, convincing them that he has a firm hand on the tiller, Neri will put himself in position to thwart Elliott’s boardroom putsch.

Read What You Want

I am a voracious reader. My range is eclectic, what you might call catholic with a small c. I read fiction and non-fiction, though I find that some of the latter, when embroidered and embellished, doesn’t always stay in its lane. On LinkedIn these days, I see pundits urging others to focus an allotted amount of time each day to reading non-fiction. Just non-fiction. These people are counseling against reading fiction, which they presumably see as unserious and therefore a waste of time.

I have two objections to their counsel. First, we shouldn’t see reading as a chore, something that one must do to check something off a list or to fulfill an obligation. If you turn reading into a penance you must discharge, you make it onerous and unpleasant. You should enjoy reading, either because it amuses, entertains, edifies, or informs. Reading should offer you a carrot (or any other vegetable you enjoy eating), not the thwack of a disciplinary stick.

My second objection involves the prioritization of non-fiction over fiction. If a book is well written and intrigues you, read it. When you read, your mind is engaging with the text and, by extension, with the author. Substantive non-fiction obviously has its place. You learn from reading it, regardless of whether the book addresses medieval history, social-media algorithms, or AI modeling and inference. There’s always something new to learn. Nobody knows it all, and there’s always an opportunity to pick up a new book that helps us extend and expand upon what we think we know about a given subject or topic.

That said, fiction has its charms, too, and not merely for its aesthetic appeal. I agree with those who’ve said that fiction, as it need not comply with facts, can reveal truths about human character and motivation that non-fiction doesn’t even attempt to explore.

From an author’s perspective, of course, writing fiction and non-fiction involves different methodologies, processes, and mindsets. One gives free rein to imagination when writing fiction. The author of a novel might be concerned with verisimilitude, but that person also creates a different world, separate from that in which we live. The novelist owes no particular debt or fealty to mundane reality. That’s particularly true in a genre such as science fiction.

The point is, I don’t advise a dogmatic approach to reading. If the written word is of high quality, created with care and distinction, you’ll probably derive pleasure or knowledge (or both) from reading it. If the text has uncommon form and style, so much the better. Music isn’t the only art that can swing.

Reading is important. You get inspired from what you read and what you learn from reading. Research, as I know from my past professional guise, involves a lot of reading. Before one writes about something, one should know about the subject. One only gains mastery of the subject by reading texts and listening to people that impart valuable knowledge and expertise.

I’m writing this text to explain, not to excuse, my methodology, which has worked for me over the years. I’m currently digging deep into a few subject areas, and I will share my findings with you when I feel I’ve done enough due diligence to offer a perspective that is meaningful and distinctive.

I’d rather read an informed perspective, one that’s been carefully researched, than opinionated jabbering. If you want the latter, for whatever perverse reason, you have recourse to Twitter (X), a destination that has devolved into a fetid river of effluent, its algorithm tuned to churn out reeking waves of affected outrage and provocation.

But I Also Like to Watch

To end the week on a lighter note, let’s briefly acknowledge the implosion of the mutually exploitative relationship between Donald Trump and Elon Musk. As Chauncey Gardiner (real fictional name, Chance the Gardener) said in Being There: “I like to watch.”