HP, RIM take flak from nervous financial industry customers

NEW YORK Fri Dec 7, 2012 4:18am IST

A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012. REUTERS/Mark Blinch

A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012.

Credit: Reuters/Mark Blinch

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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 (BLK.N), said at an information technology conference in New York sponsored by Waters magazine.

Hewlett-Packard (HPQ.N) 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 (JPM.N) 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 writedown in its third quarter. That followed a writedown of almost $11 billion on its EDS services division in the second quarter.

An HP spokesman declined to comment on the JPMorgan and BlackRock remarks.

In August, an HP press release touted BlackRock's upgrade of an investment management application delivery platform that it said would automate daily testing and reduce testing time for certain applications to hours from days.

BLACKBERRY'S EXISTENTIAL PROBLEM

BlackRock's Condron lauded Research In Motion's RIM.TORIMM.O Blackberry, which is his firm's default-issued smartphone, as "still the best enterprise platform" for internal communications but expressed concern about the company's health.

"I would like them to be a preferred supplier but am afraid they might not be here," he said at the conference. "They are faltering. That has to concern many of us."

Research In Motion "has a solid foundation and a leading position in the enterprise sector, where around 90 percent of Fortune 500 companies rely on BlackBerry to get their work done," a RIM spokesman said in an e-mailed statement.

RIM, the dominant provider of smartphones to U.S. companies, stumbled badly in recent years as it lost market share to Apple Inc's (AAPL.O) iPhone and smartphones powered by Google Inc's (GOOG.O) Android platform. It is about to introduce a new release of the phone that has received positive reviews from some analysts.

"We have shown BlackBerry 10 to a broad range of carriers, enterprises and developers in recent weeks," the RIM spokesman wrote. "We're confident that BlackBerry 10 will allow us to become the innovation leader in the mobile computing domain."

(Reporting by Jed Horowitz; Editing by Richard Chang)

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