Is Hewlett-Packard the Most F*cked Company in the World?

I’m fully aware that, should Hewlett-Packard undergo a major transformation and turnaround in the next year, I will look like a total jackass and people will point back to this blog post with tears of laughter streaming down their cheeks.

I don’t care, I accept that this is a possibility.

That said, a Hewlett-Packard turnaround is not something I would bet on at this moment. I’d prefer to see evidence of one before playing the boy-plunger contrarian, as Livermore would say.

I caught this interview with CEO Meg Whitman in BusinessWeek and I couldn’t even believe the quotes. I’m going to analyze a few of them below:

“What I learned in my political career…is that there are lots of pundits. Everyone has an opinion on everything.”

JB: Right, but in this case the pundits warned her not to take the job – taking charge of this company two years ago was like being helicoptered out to the helm of the Titanic 20 minutes after contact with the iceberg. Other pundits were warning previous management about the tablet revolution and the importance of mobile. Not every outside opinion has been “noise” just like not every opinion held by management or the board over the years has turned out to have been helpful (the purchase and then almost-immediate shuttering of Palm a great case in point).

HP has some of the better-looking Windows 8 machines on sale at the moment, including hybrid units such as the EliteBook 2760p Tablet PC

JB: What in god’s name would possess a company to build a consumer computing device and name it the “EliteBook 2760p Tablet PC” in an era where the bestselling devices are called “Galaxy” and “iPad” and such?  What is the purpose of naming things in such a way that consumers can’t recall them? Random combinations of numbers and letters like “2760p”, it’s so fucking stupid that this device – which is actually rather unique – doesn’t have a cool, catchy name that people can talk about, ask for at stores, etc. Dummies.

“Listen, Windows 8 did not appear to grow the market…But we are in early days, and the magnitude of the user-interface change and features were substantial. We have to stick with this. I am a believer. We are going to continue to invest in this platform. Whenever you do something of this magnitude in this kind of environment, you have to stick with it.”

JB: STOCKHOLM SYNDROME! She is trapped, caught. “We are going to continue to invest in this platform.” and “You have to stick with it.”  No Meg, YOU have to stick with it. We, the consumers, don’t have to do anything of the sort – and we aren’t. The Windows PC is expected to drop down from 72% to 65% market share this year. This while the non-Windows tablet market increases by 37% each year through 2016. There’s no end in sight.  But I fully understand why you’re committed. Because you have no choice. What are you going to say?

Whitman reiterated her stance that HP has to have a smartphone—eventually.“We have a lot of work that has begun,” Whitman says. Which means what exactly? Are people just thinking about building a product or are they actually working on one? “We have technologists strategizing about it,”

JB: Jesus. You’re in the strategizing phase in 2013? Don’t even bother, it’s over.

This disruption should provide HP with opportunities. “We want to capitalize on these big, tectonic plate shifts in the industry,” she says. “I would be worried if there wasn’t so much change.”

Meg, the tectonic shift already happened. Your company was doubling down on big gray boxes and Microsoft crashware. Your company was investing in toner and printer cartridges, competing with Canon and Lexmark while Apple ate your lunch.

In 2007, Hewlett-Packard generated over $8 billion in profits. In the 12 months ended October 2012, it produced over $12.5 billion in net losses. The company is in the process of laying off over 24,000 employees and was the second worst-ranked personal computer brand in 2012. On Meg Whitman’s watch, H-P has lost over $50 billion in marketshare.

You might be asking, “how much worse can things get?” Moodys has downgraded the company’s credit rating to just a few notches above junk. The company has over $28 billion in debt, a declining cashflow situation and is facing “an avalanche” of ten separate lawsuits related to the disastrous Autonomy acquisition (for which it has already taken a charge of $9 billion) This is still a $30 billion market cap stock here in the mid-teens. It can certainly get worse.

Now you may also be asking “aren’t all of these items are well-known? isn’t this all old news?” Okay, but what’s the new news? The fact that Windows 8 had a whatever launch? Or that with every passing month, millions of children under the age of 10 are being handed a device that is a non-Wintel PC? Do you think this generation will buy a Hewlett-Packard anything? Will they go looking for an HP machine running Windows 12 when they’re in high school? Ridiculous.

For 2013, by the company’s own estimates, they’ll see sales drop by 5% this year. I think that estimate is wishful thinking.

What would change my mind here is a sudden ramp in sales (not likely) or the introduction of a hot new product (impossible in the short-term, they don’t even know how to fucking name a product). The other potential catalyst would be if the rumors about Carl Icahn turned out to be true. There’s been speculation that he’s been buying up shares. If so, I’m sure the stock pops on the news. There will be temporary excitement over potential spin-offs or unit sales – until everyone realizes that nobody wants anything this company possesses for premium valuations.

Barring a surprise acceleration in sales, a hot new product or the white knight / corporate raider deus ex machina, I do believe this is the most fucked company in the world at the moment.

I’m not sure there’s anything Meg Whitman can say or do about it.


HP CEO Whitman Dubs Windows 8 a Work in Progress (BusinessWeek)

Moody’s downgrades HP credit rating (FT)

HP Has Been Slammed With 10 Lawsuits Over The Autonomy Debacle (Business Insider)

Hewlett-Packard Company (HPQ): Even If Icahn Doesn’t Buy, Should You? (Insider Monkey)





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