1974 – Hewlett Speeches

Box 3, Folder 13 – General Speeches


February 26, 1974 – Shareholders Meeting, Probably in Palo Alto, CA


2/26/74, Outline of comments and data to be presented, handwritten by Hewlett


Hewlett opens his remarks saying “As I said last year, it’s nice to have a good report to make again.


“It’s good to have such a nice turnout – particularly as we want to make this a valuable meeting for you by allowing you to understand your company better. It is a most complex operation. In our annual report we tried to give you some indication of the scope and breadth of our operation. Many of the items pictured in the report are to be found on display – hope you will take time to visit these displays, and, if you have time, to participate in a plant tour.”


He follows with a summary report on 1973 operations:


Sales up 38%    Continues trend, was up 27% in 1972, or 76% in 2yrs.

Pre-tax income up 27%

Net income up 32%


Hewlett says that in citing this data he “is reminded that we are a high PE ratio company and as such it is important that this operation of the company be well understood – no unnecessary surprises.”


He says he is compelled to point out that while PTP fell from 15.5% to 14.3%, a lower tax rate cushioned the impact.


And he says that while pocket calculators have had an impact on sales, giving a “free ride” for two years, “competition is now here.”


On the other hand he points out that:


With the rapid growth, 50% of HP employees have been with the company less than 18 months.


And parts and material shortages have increased costs and have been responsible, in part, for a bulge in inventories.


Hewlett goes through more data, including performance of each of the product groups, and then talks of the future, He says the rest of 1974 is unclear – good backlog, expenses controlled. “Unless the bottom falls out do not anticipate major problems.


He closes with a mention of the subject of long-term debt, saying that their plan to take on such debt had been called off due to:


1)     “Encouraging nature of profit performance and cost controls program


2)     The rapid decline in cost of money


3)     The prospect of some price relief


4)     Most of all, determination by a majority of HP people that did not want to change a policy that had served us well, (i.e. pay as you go), and a resultant dedication to run the organization so that we can get on a pay as you go basis.”



Box 3, Folder 14 – General Speeches


February 27, 1974 – “Bay Area as a Unique Region,” American Association for the Advancement of Science, San Francisco, CA


2/27/74, Hewlett’s handwritten notes outlining his remarks. He appears to be introducing a forum of speakers on various subjects related to the Bay Area. He states that this discussion is being broadcast live to KQED FM radio station 88.5.


Hewlett says the Bay Area is  a unique region and contains ¼ of the people who live in California.


“It has,” he says, “most of the problems of major urban areas: smog, transportation, housing, plus some its own, e.g. earthquakes.”


The region has approached solutions to many of these problems on an integrated, area-wide basis:

East Bay Regional Parks, 1930

BART – Bay Area Rapid Transit


ABAG – Association of Bay Area Governments


Air Control Board



He says they will try to put all of this into an integrated picture, starting with such basic factors as population trends, energy needs, transportation problems, housing.


Then he says they will move on to look at Planning and Control, Land Use, problems of air and water pollution, education, medical care, plus the future outlook for the area.



Box 3, Folder 15 – General Speeches


March 26, 1974 – Analysts Breakfast, New York, NY


3/26/74, Outline of information for remarks handwritten by Hewlett



Hewlett reviews performance data for 1973 – a very good year


He talks about their planned long-term debt – which they cancelled. They had considered such a step following two years of rapid growth, but concluded a lack of proper asset management was the real reason causing a cash flow problem.



He thinks HP growth in 1974 will be between 10 and 15% over 1973.


In talking about pocket calculators he discusses Texas Instruments’ model SR-50. “The SR-50,” he says, “is a very good unit in design despite TI’s criticism of Polish Notation,[which] we feel is best suited for scientific and engineering applications.”


Hewlett says they expect to finish 1974 “with a better looking balance sheet.”


“I would characterize 1974 as a year of great uncertainties – of considerable belt tightening – a year to catch up with ourselves. After all we grew 76% from 1971 to 1973, and deserve a chance to catch our breath.”



Box 3, Folder 16 – General Speeches


April 10, 1974 – Testimony on behalf of WEMA, before the Finance Committee of the U.S. Senate on Trade Reform Act of 1973, Washington D. C.


4/10/74, Copy of the typed text of Hewlett’s remarks. This runs some 27 pages, but it is accompanied by a summary of his testimony, giving  WEMA’s position on this legislation, and this is described below.


In general Hewlett says WEMA “strongly supports the concept and most of the specific provisions” of the legislation, H. R. 10710.


The comments on specific provisions were:


Title I – Negotiating Authority

“WEMA believes that H. R. 10710  provides the necessary legislative authority to permit meaningful negotiations of tariff and non-tariff trade barriers.”


Title I – Consultation with Industry

“WEMA is especially pleased that representatives from the private sector will have the opportunity to make their views known on negotiating objectives and bargaining positions.”


Title II – Relief from Injury Caused by Import Competition

“WEMA generally supports the sequence for extending import relief set forth in section 203. WEMA is particularly pleased with the safeguards afforded Tariff Items 806.30 and 807.”


Title II – Adjustment Assistance

“WEMA supports the expanded and liberalized adjustment assistance provisions for employees and firms.”


Title III – Relief from Unfair Trade Practices

“WEMA recommends that the Secretary of the Treasury be permitted to waive the application of countervailing duties for a period of up to four years when the products are produced in foreign government-owned or controlled facilities.”


Title IV – Trade Relations with Countries not Enjoying Non-Discriminatory Treatment

“WEMA recommends modification of Title IV to permit the extension of MFN treatment and the granting of credits when such actions are in the best interests of the United States.”


On Related Matters


Access to Raw Materials

“WEMA favors adoption of language which would seek enlargement of the scope of powers of the GATT to deal with raw material shortages, and permit retaliation, if required, against unjustified foreign export restrictions.”


International Tax Considerations

“WEMA believes that any changes in the tax laws affecting U.S. trade and the international activities of U.S. firms should be made with the objectives of increasing U. S. exports and permitting U.S. companies to operate abroad on the same basis as their foreign competitors. WEMA urges the Congress not to enact tax rules and regulations which would handicap U.S. firms and permit foreign competitors to seize market opportunities to the ultimate detriment of U.S. industry and labor.”



Box 3, Folder 17 – General Speeches


June 2-4. 1974 – Managers Meeting, Quail Lodge, Carmel Valley, CA


6/2/74, Notes for remarks handwritten by Hewlett


Hewlett opens the meeting saying, “After running the company for over 30 years on a pay-as-you-go basis, we have gone from a position at the end of 1972, when the net of our total borrowing and cash on hand had just about been a wash, to the point at the end of 1973 [when] our short term debt less cash was more than $110M.


“The bulk of these increases was accounted for by two items: $188M in A/R, and a like amount in inventory; and, secondly, the inverted emphasis on profit and growth. By that I mean that in many cases growth had become the overriding goal and not the profit to support the growth, i.e. we lost sight of the basic tenant of the company of pay-as-you-go.”


“As I look at the future I am convinced that we can solve our asset management problem – that we can bring growth and profit into line – that we can build plants and design organization structure, but I don’t see us on the road to solve what may turn out to be our most difficult problem – managers. We have built this company on the basis of MBO and that presupposes adequate managerial talent. Without this asset MBO fails.


“Thus as we go through the next day and a half I hope that you will keep this thought in mind – when do we get the people, how do we select them, and how do we train them.”


“I want you all to start thinking most seriously on this matter as shortly it [will] become one of our principle areas of focus.”



Box 3, Folder 18 – General Speeches


June 10, 1974 – At WEMA Meeting, Palo Alto, CA


6/10/74, Outline notes for speech, handwritten by Hewlett


Speaking of the world pre-October 1973 Hewlett says foreign competition was very strong. U.S. $ twice devalued. U. S. coming to the end of a long cycle of growth – world in phase.


Reviewing the effect of the petroleum crises, Hewlett says it should be seen in perspective:

1)     One further step in the destruction of the status quo established at the end of WW II

2)     Followed pattern that led to abolishment of fixed exchange rates of Breton Woods

3)     Pattern quickly recognized by developing countries as a method of forcing a more equitable distribution of the benefits of world economic growth between the developed and the developing nations.


The immediate results were”


1)    Different for different economies

  1. A disaster for nations with little or no natural resources
  2. A bonanza for developed countries with an abundance of natural resources
  3. A great problem for developed countries with few resources – Japan
  4. A chance to improve their position for developed countries with nearly sufficient resources


2)    The results to date have not been as bad as expected


Longer Term Results


1)   Will further compound trends such as:

  1. rise of nationalism
  2. increased trend toward socialist – France, Germany, UK
  3. inflation


Effect of this gloomy picture on technology industry of U.S.


U.S. in a favorable position: food surplus, natural resources, leads to strong economic position


U.S. technology some of the best in the world.


Strengthening dollar will reverse trend of foreign manufacturing




As long as U.S. can maintain technological initiative outlook very good, both here and abroad


As we move more into an era of scarcity, “conservation” becomes the word.

It is going to be increasingly difficult to do business in the world.

It is going to be a tough time to be a manager – but good management has a chance to pay off handsomely.



Box 3, Folder 19 – General Speeches


October 10, 1974 – “Implementing Affirmative Action,” Human Relations Commission, Palo Alto, CA


10/10/74, Copy of typewritten text of speech


Hewlett first looks at the “background of the problem,” and describes what he sees as the difference of problems faced by women and those faced by minorities. He says minorities have always had a position in the workforce, albeit an inferior one. “In almost traditional fashion, these ethnic groups drifted together into areas of sub-marginal housing, which rapidly took on the characteristic of a ghetto. Both the economic condition and the cultural environment, as well as the prejudices of society, often denied these people even the most basic education, let alone access to the higher levels of education.


Women, (speaking of non-minority women) were felt to belong in the home, not in the work place competing for a “man’s job.” They were able to avail themselves of the same education as males, at least through high school. Increasing numbers of women with university or college degrees are now entering the work force,


Hewlett says “…the objective of affirmative action is to place in increasing number of both minorities and women in the work force. But even more important than numbers alone, is to assure that they simply do not occupy the lower levels of employment, but that they be dispersed through all levels of management. Clearly, this is not simply a case of equal opportunity, but is a case of an affirmative action that will provide a positive drive to achieve these results….Unfortunately, it is not possible to pass laws and have it happen, unless people really understand the reason for the laws and are willing to support them both in spirit and in fact.”


“To get people into the work force, i.e., equal opportunity, is nowhere as difficult as getting them properly distributed within the work force. I can assure you that one may be able to meet all of the requirements of the former, but if the first level of supervision is not sympathetic, is not understanding, is antagonistic, little is going to be achieved in the way of advancement. Therefore, in my view, one of the most important requirements is to make it known within the organization that employment, and advancement of women and minorities, is not only the law, but is the right and equitable thing to do….Thus, if the first step is entrance employment, the second step is a receptive environment.”


But beyond these first two steps, Hewlett emphasizes the need for training and qualification for advancement. He explains that individuals may not think of themselves as eligible for advancement, and may not take steps to achieve the skills that are necessary for advancement. “Therefore,” he says, “the third step really has two parts – the establishment of adequate training programs, and the encouragement of both women and minorities to participate in these training programs, and above all,  demonstration by the organization that individuals who have qualified themselves for advancement have been promoted when openings are available.”


Saying that he has been primarily addressing himself to problems related to hourly workers, he says that the entrance and advancement into professional and management positions is more difficult. “…on-the-job training, while important, is less critical and more dependence must be placed on university training. Here the problems between minorities and women are sharply differentiated. As I pointed out at the beginning, higher education has traditionally been more available to women than to minorities. For women, therefore, it is more a question of preparing themselves for a career, with the expectation that professional and managerial jobs will be available to them on graduation.”


Hewlett says it is unfortunate that too few women are electing an engineering education. And in the Peninsula area, he sees an engineering education as almost a “sine qua non for management advancement.” He sees more women active in the field of computer science and “this field can well provide a seed bed from which women with professional training can move to higher levels of management.”


The problems facing minorities are “sharply different” than those facing women, Hewlett feels. “If one looks at engineering, for example, the seeds that lead to a bachelor degree in engineering really were planted way back in grade school. A proficiency in mathematics is a corner stone of most engineering. Mathematics is a long series that really spans all the years between grade school and the baccalaureate degree. If a student does not start early along this route, he will find it difficult to catch up. It is essential, therefore, that the schools encourage minority children who have mathematical proficiency, or who show potential for mathematics, to enroll and continue with this field of study. By the time the student graduates from high school the die is already cast as to whether he is qualified or not to enter an engineering curriculum. I believe that industry has an opportunity to work constructively with the school system to try and encourage qualified minority children to become interested in mathematics. If we are to have a reasonable distribution of minorities in the professional field, we must provide them with the tools to achieve this education. No amount of law making is going to produce instant engineers. The background requirements for some of the other professional areas is less stringent, but certainly any program in business administration requires a fairly good proficiency in mathematics”


Advancement for women and minority professionals is much the same as for hourly workers, Hewlett says. “There must be internal training programs, there must be sympathetic supervisors, and there must be a demonstrated advancement route. In addition, there is a more subtle form of barrier that inhibits advancement that must be recognized and dealt with. This barrier springs from the fact that much business is really transacted in a most informal style – at coffee breaks – during lunch – during recreation activities. Unfortunately, it is at such times that individual groups seem to naturally separate – women have their coffee in one area, men in another; ethnic groups collect at lunch and so on. If this problem is recognized, much can be done to minimize it. By encouraging a great commingling by both minorities and women, thus allowing them to participate in this important component of information transfer and decision making.


“You must have detected through all of this discussion, a common theme of management dedication to solving our problems of social inequity. As in most organizations, this type of leadership must come from the top, and unless the boss is really convinced that these goals are worthwhile efforts and unless the boss clearly conveys his views to those below him, no real progress is going to be made. But he cannot do it alone, nor will the organization do it without his leadership. Thus, in the last analysis the implementation of an effective affirmative action program is spread throughout the organization and it is a much a philosophical point of view, as in any set of actions.”



Box 3, Folder 20 – General Speeches


October 29, 1974 – Meeting with Security Analysts, Palo Alto, CA


10/29/74, Outline for speech handwritten by Hewlett, as well as a more complete text, also handwritten by him


Hewlett says the purpose of the meeting is to impart information to them, as representatives of the investing public, which will enable them to better serve their customers, and avoid the “desire to take off on flights of fancy either on the up side or the down side.”


“For example,” he says, “[we] have been trying for some time to tell you that we aren’t going to make $3 [EPS] and despite this I continually read your figures that say we are. Well, [we] were right – with 11½ months under our belt, it now appears that $2.85 plus or minus 5 cents is a much closer guess.”


Hewlett reviews estimated fourth quarter results and then gives some general comments on the year. He says the “most significant” item was the decision to operate on a pay-as-you-go basis.


On the year ahead he says it will be “most difficult indeed…. If it were not for some very strong new products coming on stream next year we would expect no growth outside of [that] due to inflation.” With these new products Hewlett predicts a growth rate of about 5%, 15% including inflation. He calls 1975 “a year of catch-up” following 130% growth over the previous three years.


Hewlett moves into what he calls their “philosophy.” He says that “In times like this it is important to know both within and without the company how we view ourselves – what we will do and what we will not do – what we are and what we are not.


“We are a producer of high quality products that are based on innovation and a well planned engineering program. For this we must charge more. Our customers have thought this was a good trade-off and have been willing to pay more.”


“As we become more and more involved in the consumer business we must remind ourselves of this fact and concentrate on high performance, technical innovation and reliable products – and not let ourselves become seduced by the siren call of lower prices which hopefully are compensated for by increased volume.


In the area of management Hewlett says both he and Packard will be retiring in four years and that it is important that they experiment with alternate forms of management, and that they train people in the higher levels of decision making. “I want to assure you of two things,” he says, “There is not an anointed successor – neither in the top team nor elsewhere in the organization. Much can happen in four years. And secondly, that neither Dave or I plan to retire from active management of the company until we reach the mandatory retirement age of 65.”