HP, RIM take flak from nervous financial industry customers

Thu Dec 6, 2012 5:51pm EST
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By Jed Horowitz

NEW YORK (Reuters) - JPMorgan Chase & Co and BlackRock Inc voiced concerns about Hewlett-Packard Co and Research In Motion Ltd this week, saying business and operational struggles may affect the reliability of two of the biggest technology service providers.

"We are concerned about some of the players that we have relied on to provide material services and equipment," Scott Condron, chief technology officer of asset management giant BlackRock, said at an information technology conference in New York sponsored by Waters magazine.

Hewlett-Packard is BlackRock's preferred provider for its server farms and a major vendor for its personal computers.

"I like their equipment and I would like them to continue being a supplier, but I need them to be a better company," Condron said in an interview.

Richard Anfang, chief information officer at JPMorgan Chase's securities services division, also referenced HP's problems as a risk factor banks should consider in dealing with suppliers.

"You really want to understand what your reliance on vendors is and how that puts delivery service at risk," he said at the conference. "Where do you have single points of failure, where do they not have resiliency - everything from a Verizon central office switch flooding during the hurricane to accounting scandals with HP. You need to think about your vendors and manage the execution risk."

The comments may in part reflect negotiating stands as strained banks and financial companies scrutinize all parts of their operations to cut costs when renegotiating contracts, said some Wall Street observers. They noted, however, that the comments were made to other securities industry technology professionals in the spirit of honest communication.

HP said in November that a UK software company it bought last year for more than $11 billion cooked its books prior to the acquisition, requiring an $8.8 billion write-down in its third quarter. That followed a write-down of almost $11 billion on its EDS services division in the second quarter.   Continued...

A logo of HP is seen outside Hewlett-Packard Belgian headquarters in Diegem, near Brussels, January 12, 2010. REUTERS/Thierry Roge