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.

Reply Score: 7

RE: I'm not dead yet!
by transami on Sat 24th Nov 2012 11:58 in reply to "I'm not dead yet!"
transami Member since:
2006-02-28

> "HP tried to make a play for phones and tablets with Palm/WebOS, and failed."

The didn't "fail", they committed suicide.

I still believe Microsoft was behind all of that. I suspect they put the kibosh on Hurd (as if no one has ever heard of a CEO sleeping with his secretary before!), then they strong armed Leo with the threat of revoking their right to distribute Windows on their PCs. So HP had little choice. But I think it is also why Leo decided it was time for HP to get out of the stinking PC business. And we all know how that decision fared. But if they can't stand up to M$, he was probably absolutely right.

Reply Parent Score: 0

RE[2]: I'm not dead yet!
by johndoe445566 on Sat 24th Nov 2012 14:36 in reply to "RE: I'm not dead yet!"
johndoe445566 Member since:
2012-11-23

The didn't "fail", they committed suicide.

Nobody is happy about what happened with Palm/WebOS. The fact is that Palm phones and the Touchpad were not succeeding in the marketplace at prices above the cost of production. Reasonable people can disagree on whether HP should have kept trying, or if they made the best of a bad situation by not throwing good money after bad. My heart wishes they had kept trying, but my head understands why they didn't.

I still believe Microsoft was behind all of that

Never attribute to malice that which is adequately explained by stupidity.

Reply Parent Score: 4

RE: I'm not dead yet!
by viton on Sat 24th Nov 2012 14:50 in reply to "I'm not dead yet!"
viton Member since:
2005-08-09

HP tried to make a play for phones and tablets with Palm/WebOS, and failed.
Tried?
1) they released a non-compatible tablet WITHOUT the software
2) quickly ceased production/development and sold the remaining stock under production cost

Hit & Run strategy

Reply Parent Score: 5

RE: I'm not dead yet!
by zima on Sun 25th Nov 2012 08:47 in reply to "I'm not dead yet!"
zima Member since:
2005-07-06

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.

There's plenty of room for growth in emerging markets (of course, Lenovo is likely positioned for that much better than HP)

Reply Parent Score: 3

RE[2]: I'm not dead yet!
by johndoe445566 on Sun 25th Nov 2012 18:44 in reply to "RE: I'm not dead yet!"
johndoe445566 Member since:
2012-11-23

There's plenty of room for growth in emerging markets

Don't believe all the hype about emerging markets. There's a reason they're called "emerging". You need to consider profitability, not just unit volume.

Reply Parent Score: 1

RE: I'm not dead yet!
by phoudoin on Mon 26th Nov 2012 14:01 in reply to "I'm not dead yet!"
phoudoin Member since:
2006-06-09

It's hard to see how HP can grow at a rate that makes Wall Street happy.


Truth is it's hard to makes mainstream people (customers, workers) *and* Wall Street happy at the same time.

That's a trend since last 30 years.

Reply Parent Score: 2