Paul’s Pricing Dictionary: Currency

P 150x150Currency n. 1) The first refuge of the scoundrel when there is the slightest adverse movement in exchange rates to excuse crap business performance. This is a phenomenon which miraculously disappears just as soon as there is a beneficial shift in exchange rates. 2) The perfect excuse for a list price increase and just one of the many reasons why list prices matter.

And, by the way, if you can’t implement an effective price increase when you have the prevailing wind of currency behind you – or for that matter, highly publicized, industry-wide cost increases – you never will. A good clue that you have this problem is when your primary competitor starts complaining that they can’t raise prices because you can’t, so the whole industry loses money because of your ineptness.

Previously from Paul’s Pricing Dictionary:

Bad Selling, adj.+gen. Bad Selling is somehow always absent as an option in Bid-Loss analysis. But if there ever was a Bid-Win analysis, I’m sure that Good Selling would somehow get 100% of the credit. Of this I feel absolutely sure.

Happiness, n. A feeling of well-being which is directly proportional to your gross margin %.

Insight, n. What your Pricing Team should be providing you with. Insight from your Pricing Team should come in two distinct flavors:

Business Insight, n – into your business performance

Competitive Insight, n – into your competitors’ performance

Margin Recovery Plan, n. A work of complete fiction written by Sales in the hope that no-one else will read it and, most of all, the author will not be held to account for its contents. Ever.

Organizational Memory, n. The Pricing Team. The Pricing Team remembers what worked and what didn’t work. It has a longer data retention period than anyone other than Tax. And unlike Finance, well, let’s just say, they are unlike Finance. The Pricing Team just knows where the data (coll. n. s.) is and lots, lots more. I thought I would list how much more but it started getting creepy so I stopped. You’re welcome.

Price, n. Value, plus a reasonable sum for wear and tear of conscience in demanding it. (qv, Ambrose Bierce, The Enlarged Devil’s Dictionary)

Strategic Deal, n. deal struck at a massively negative gross margin by CxO or Executive Sponsor, usually without any hope of margin recovery. See Margin Recovery Plan.

Paul’s Pricing Dictionary: Currency

P 75x75Currency n. The first refuge of the scoundrel. 1) The first excuse used as soon as there is an adverse movement in exchange rates to explain business under-performance. This is a phenomenon which miraculously disappears as soon as there is a beneficial shift in exchange rates. 2) The perfect excuse for a list price increase. 3) One of the many reasons why list prices matter.

You should wonder why analysts feel the need to make excuses for HP Storage Part 2: here’s the data you asked for

Storage Growth Rates Sep 15 1280x720Some folks asked to see the year-over-year revenue growth for storage and here it is. It’s all sourced from the companies’ 10-Q submissions and compares product revenue (not software or services). You can see HP Storage (thick brown line) along the bottom with IBM Storage (thin black line) with mostly negative growth since 2011. The crossover in the last quarter’s results are highlighted in a red ellipse. Lipstick red. Does this really qualify as a turning the corner?

You should wonder why analysts feel the need to make excuses for HP Storage.

One man looking at anotherin a crowd © w white border 190x156The Register: HP storage results borked by bleeding currency rates It’s up to HP to mitigate the impact of the currency; if the currency impact was favorable it wouldn’t get a mention.

  • In the past 16 quarters, HP Storage has only shown positive year-over-year growth in four of them, and of those four, three showed growth of 1.0% or less. Was currency also to blame in all of the past 16 quarters? I don’t think so. But forget currency, just think of 15 out of 16 quarters of year-over-year-growth <+1.0% with 12 of those quarters being negative.
  • With enough negative quarters in tow – remember 4 bad quarters is only one bad year but 16 bad quarters is an election cycle – it eventually becomes possible to start to appear to “outgrow” the competition, but that’s only because HP is “growing” from the very low base it created for itself.
  • So if HP Storage “appears” to be doing comparatively better than EMC, IBM & NetApp because it outgrew each of them in the past quarter (FY3Q15), well that’s the first time that it has happened. Ever. One quarter marginally outgrowing EMC doesn’t make up for an eternity of under-growing EMC.
  • To put last quarter’s revenue of $784M in its proper context: it’s the 2nd lowest quarter of revenue in the last ten years (the lowest was the previous quarter) and that’s 20% down from its’ 3Q peak in 2011 of $976M. In contrast, EMC is up 6% over the same period, not great, but significantly better than HP.

And ask yourself this: what exactly is it that HP Storage will be able to do after the split that it couldn’t do today?


p.s. I really wasn’t going to post this until a friend asked at lunch how HP Storage was doing because she’d heard that they were doing rather well, at which point ….

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