Linked by Howard Fosdick on Fri 23rd Nov 2012 14:03 UTC
In the News Hard to believe, but articles are popping up at business websites claiming that venerable Hewlett-Packard may fail. In their most recent fiasco, HP wrote off a loss of $8.8 of their $11.1 US billion acquisition of Autonomy and have alleged fraud in the deal. Revenue is down 7% from a year ago and the stock has hit a 10-year low. The company is laying off 27K employees but that may not be enough. Some speculate HP might be broken up into parts with buy-outs involved. This article from last May offers a good in-depth analysis of how all these problems came to pass.
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I'm not dead yet!
by johndoe445566 on Fri 23rd Nov 2012 17:06 UTC
johndoe445566
Member since:
2012-11-23

No, HP the company is not dying, but HPQ the stock is getting it's ass kicked. HP had revenues of $120 BILLION in FY2012, and made over $8 BILLION in PROFIT. That's real cash in the bank. The reported "loss" is an artifact of how public companies are required to account for prior investments going bad.

IMHO, HP faces two real problems. The first is the changing nature of the computer business. Many of the products that HP sells today have reached the peak of their popularity. I don't see desktops and laptops going away, but there's no more growth there. HP tried to make a play for phones and tablets with Palm/WebOS, and failed. HP makes good money on servers, but virtualization and cloud computing mean corporations are buying fewer servers (cloud providers are buying tons of servers, but many buy direct from China). HP's services organization is profitable, but is treading water. Services is labor intensive; growth in revenue usually comes with corresponding growth in expenses, making it difficult to increase profits.

This brings us to the second problem. HP was #10 on the 2012 Fortune 500 list. It's damn hard to generate significant organic growth in ANY company of that size. It's hard to see how HP can grow at a rate that makes Wall Street happy.

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