HP announced, rather rudely over an earnings call, to its stock holders and employees that it is killing its WebOS development, and all production of WebOS hardware including the HP Touchpad and the anticipated Pre3 phones. It announces a fire sale on the HP touchpad ($99 for the 16GB model and $149 for the 32GB model) and these puppies fly off faster than you can say "HP". What the fuck happened?
Leo Apothekar happened. Bad management in action, poor planning, worse execution and senseless destruction of share holder value happened. HP's stock fell 20% hours after the announcement. HP is also mulling a spin off of its PC division, a division responsible for a huge chunk of its revenue.
I only wonder what HP's board was thinking? What tune is Leo the Lion piping that he's got the board of a multi-billion dollar tech powerhouse purring and skipping along happily while he leads them to their perdition? What are HP stock holders waiting for? Where is the lawsuit?
I guess everyone is waiting for the dust to settle before launching their first salvo. Leo and the board can still save their skins.
HP's board suffers from extreme myopia (or some form of encephalopathy). HP's board:
a) approved the purchase of Palm for 2+ Billion dollars,
b) approved the expenditure of several million more in development and silly advertisement campaigns (they hired Russell Brand!)
c) crippled a viable competitor to the Ipad with an obscenely high price (going toe-to-toe with the entrenched market leader)
d) killed the platform in 48 days, before even letting it get any traction (see (c) above)
e) demoralized their own employees by breeding uncertainty and distrust. Most will probably pack up and leave for competitors: Apple, Microsoft, Android
f) spurned all app developers, almost permanently, and yet keep hopes of floating WebOS afloat
g) let Leo announce the "planned" spin-off of the PC division WITHOUT any concrete plan in place, almost assuring that the spin-off won't beget a good price.
h) sowed confusion in their sales channels, and have almost certainly handed the market over to Dell
i) still supports Leo Apothekar despite all of the above
Yet, if only they can get past their egos, they can make something come out of it for the share holders and employees (one must wonder what deals or incentives they have should they choose to not take corrective action).
They can:
a) reinstate the production of WebOS tables at the discounted price. Think Gillette razor blade model: take a loss on the initial hardware once, amortize the gain with the sale of apps. Retain the PC business and leverage the strong sales channels. HP's name still carries value.
b) keep pushing for adoption of webOs tablets by corporations (see a above). They had some nifty features built in like VPN support and Flash. Their email integration / Synergy is brilliant.
c) fire Apothekar.
Option d) face share holder lawsuits.
1 comment:
it's Dec 2012. The end of the world is Nigh. So is the end of HP, apparently.
- Apotheker has long since been fired
- Meg Whitman is the new CEO in the hot-seat
- HP just announced accounting improprieties in the Autonomy purchase to the tune of $8 Billion. It's taking a charge against earnings.
- A large parcel of it's Cupertino campus has been sold to Apple (for the space-ship)
- Mainstream media has caught on to the fact that HP is burning cash: see HP and the Fine Art of Setting Money Ablaze http://www.fool.com/investing/general/2012/11/24/hp-and-the-fine-art-of-setting-money-ablaze.aspx
"It takes skill and determination to produce the numbers Hewlett-Packard (NYSE: HPQ ) has put up in the past six years. And I don't mean that in a good way. If you put 10 smart people in a room and tasked them with destroying shareholder value, they'd struggle to match HP's six-year run."
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