BuSINESS
SATURDAY, NOVEMBER 16, 2019:: LATIMES.COM/BUSINESS
C
DOW28,004.89▲222.93 S&P5003,120.46 23.83▲▲NASDAQ8,540.83 61.81 GOLD$1,467.30 4.50▼ OIL$57.72 0.95▲▲▲EURO$1.1053 .0031 U.S.T-NOTE(10-yr.)1.83% 0.For anyone
who has
grown up in
the computer
technology
era, the re-
cent histories
of HP (that is,
Hewlett
Packard) and
Xerox must elicit nothing
but sadness.
What’s saddest of all is
the idea that merging these
two doddering old hulks
may be the only way to save
them.
HP and Xerox have a few
features in common. They
both have storied pasts.
They’re both wedded to a
strategy of making suppos-
edly innovative advances in
commodity products with
stagnant or declining mar-
kets — printers and person-
al computers in HP’s case,
and office printers and
copiers in Xerox’s.
They both seem to have
put more effort lately in
financial and corporate
re-engineering than, you
know, engineering. Both are
undergoing severe downsiz-
ing, with Xerox planning to
cut $640 million in expenses
and HP looking at cutting $
billion by 2022, in part by
shedding 9,000 employees.
Something else they
have in common: Carl Ic-
ahn.
The veteran activist
investor currently holds
10.6% of Xerox stock and,
according to an interview he
gave this week to the Wall
Street Journal, 4.24% of HP.
Merging the two companies
appears to be his idea, facili-
tated in part by his quash-
ing a plan for Xerox to
merge with Japan’s Fujifilm
in 2018 and subsequently
installing his associate John
Visentin as Xerox chief
executive.
Icahn would gain from
both sides of the deal. “I
think a combination is a
no-brainer,” he told the
Journal. “I believe very
strongly in the synergies.”
He didn’t say much about
leading the merged firm into
the unknown by resurrect-
ing their former reputations
for inventiveness, but rather
saw it as a cash cow still
capable of being milked.
“These types of compa-
nies that are in shrinking
industries tend to decline
much more slowly than
many market participants
may predict, while continu-
ing to generate substantial
amounts of cash,” he said.
The proposed bid would
value HP at $22 per share, or
$33 billion. The shares
closed Friday at $20.18. The
HP board says only that it’s
“committed to doing what is
in the best interests of all
HP shareholders.” Some
speculate that Icahn may
actually be interested in
having HP bid for Xerox, a
smaller company.
One can’t argue with
Icahn’s basic insight. HP
and Xerox are indeed in
shrinking industries. Argu-
ably, their long-term de-
clines were inevitable, for
the number of big corpora-
tions that can remain at the
apex of technologically
vibrant industries for more
than a generation or two can
be counted on the fingers of
one hand.
But it’s also arguable
that lack of imagination and
stagnation bred by success
also contributed to their
fates. It’s possible to craft
another rule of thumb out of
the life stories of both Xerox
MICHAEL HILTZIK
HP and
Xerox:
Sad tale
of two
giants
A merger would say
more about the tech
industry’s past than
the companies’ future.
[SeeHiltzik,C5]Before he became the director of
one of the world’s most closely
watched transportation companies,
Steve Davis owned a bar. And not just
any bar.
Thomas Foolery was dubbed by
the Washington City Paper “the
wackiest bar in Washington.” It sold
Ring Pops, kept a Bedazzler on the
premises and gave 10% off to anyone
who dressed up as Carlton from the
TV show “Fresh Prince of Bel-Air.”
So it’s perhaps fitting that Davis is
now the president of Boring Co., Elon
Musk’s wackiest transportation
start-up. Boring Co., despite its
audacious goal of remaking urban
transit, also created a media sensa-
tion last year by selling flamethrow-
ers and building an actual watch-
tower as part of an elaborate Monty
Python joke.
Now, Davis and Boring Co. have
more serious plans. On Friday, he’ll
be on site to mark the official start of
tunnel-drilling underneath the LasELON MUSK,co-founder of Tesla Inc., speaks at the unveiling of Boring Co.’s test tunnel in Hawthorne
last December. With Steve Davis now at the helm, often-audacious Boring has more serious plans.Robyn BeckPool photoBoring Co. is run by a
guy who’s anything but
Head of venture is an Ayn Rand-quoting former bar
owner — and one of Musk’s longer-serving executives
By Sarah McBrideSTEVE DAVISstarted working with Musk in 2003 at SpaceX. He
soon developed a reputation for being relentless and talented.Mark RalstonAFP via Getty Images[SeeDavis,C4]California’s job market
powered ahead in October
as the unemployment rate
dropped to a new low and
payrolls continued to grow
in the state’s longest expan-
sion on record.
At 3.9%, the jobless rate
was the lowest since 1976,
when the state changed its
statistical methodology,
adding new data to its calcu-
lations, state officials
reported Friday. That was
down from 4% in September,
and 4.1% a year earlier.
“Each month we think we
can’t get any lower in the un-
employment rate, but we
do,” said Michael Bernick, a
former director of the Cali-
fornia Employment Devel-
opment Department. “This
is comparable to the rates
we had in the 1950s.”
Nationwide, the jobless
rate stood at 3.6% in Octo-
ber, also near a half-century
low.
Golden State employers
added a net 23,600 jobs in
October, for a total of 17.
million, and a year-over-year
growth rate of 1.8%. U.S. pay-
rolls grew by 1.4% year over-
year.
The state’s monthly gain
was “healthy,” said Scott
Anderson, chief economist
of the San Francisco-based
Bank of the West. “Califor-
nia’s labor market has been
surprisingly resilient this
year, despite the head winds
from the U.S.-China trade
war and global manufactur-
ing recession.”
Since the Great Reces-
sion ended in February 2010,
the state has added more
than 3.37 million payroll
jobs. That 116-month growth
surpassed the long expan-
sion of the 1960s, Employ-
ment Development Depart-
ment officials said, account-
ing for more than 15% of the
nation’s job gains over the
same period.
California’s economy
“appears to be bucking the
national trend of slower
growth this year,” Anderson
said. In January, the state’s
payrolls rose year over year
by 1.5%, compared with last
month’s 1.8% growth. OverJOBLESS
RATE
FALLS TO
NEW LOW
California employers
add 23,600 positions
in the state’s longest
expansion on record.
By Margot Roosevelt[SeeJobs,C6]The U.S. Supreme Court
will hear an appeal from Al-
phabet Inc.’s Google in a
multibillion-dollar clash
that has divided Silicon Val-
ley, agreeing to decide
whether the company im-
properly used copyrighted
programming code owned
by Oracle Corp. in the An-
droid operating system.
The justices said they’ll
review a federal appeals
court’s conclusion that
Google violated Oracle’s
copyrights. Oracle says it’sentitled to at least $8.8 bil-
lion in damages.
The case, which the court
will resolve by July, promises
to reshape the U.S. legal pro-
tections for software code,
particularly the interfaces
that let programs and devic-
es communicate with one
another. Google contends
the appeals court ruling
would make it harder to use
interfaces to develop new
applications.
The ruling “has upended
the computer industry’s
long-standing expectation
that developers are free to
use software interfaces to
build new computer pro-
grams,” Google argued.
The appeals court deci-
sion reversed a jury finding
that Google’s copying was
a legitimate “fair use” of
Oracle’s Java programmingGoogle-Oracle clash goes to high court
Justices to hear appeal
in multibillion-dollar
copyright case over
code in Android OS.
By Greg Stohr
and Susan DeckerTHE SUPREME COURTwill review a U.S. appeals court’s decision that Google
violated Oracle copyrights by using Java code in its Android operating system.J. David AkeAssociated Press[SeeCopyright, C4]Warren maps
timeline for her
Medicare plan
Presidential candidate
outlines a three-year,
$20.5-trillion plan for
healthcare for all. CCrackdown on
vaping delayedUnder pressure from
industry and activists,
Trump rethinks the
proposed ban on
flavored products. C