HP – Managed By A Captain Of Industry With No Compass

I rarely get sucked into brand loyalty, unlike those minion Apple-whores around the globe, but when I experience good products time-over-time, such as my old HP digital camera, HP printers or my last two laptops – yes, HP products – one could argue that I have indeed fallen surreptitiously in love with the HP brand. I stumbled upon (albeit several months after the original launch) HP’s latest gadget, their foray into tablet computing, and thought that concepts and technology they were rolling out was impressive and worthy of a fiddle around in the local electronics superstore.

So when I read in the Tech press several weeks ago that this new tablet was to be shelved, along with HP’s announcement that they intend to sell off their PC business, and focus on software, I was gob-smacked.

These changes in direction are a clear result of the new man in charge….Leo Apotheker. Putting this German in charge of a predominantly hardware driven company has clearly not been a good strategy for HP. And since his appointment, the ex-CEO of SAP has shored up his influence of the HP board by firing most of the old board members and replacing them with his cronies, whilst single-handedly managing to erode the companies valuation on Wall Street, resulting in a 50% drop in the share value.

As the CEO of a software maker, it’s no wonder that he cannot get to grips with managing the complexities and margins of company who benefits from managing their supply chain and squeezing suppliers on payment terms and price points whilst keeping a close eye on inventories. He’s only ever known the “soft” side of computing, where inventory management is a non event, and where you can steal another companies software and use it as part of your service offering to your customers, as he had overseen when CEP of SAP and whose now defunct daughter, Tomorrow Now, did – whom SAP recently settled a criminal case for stealing Oracles software.

Since taking over the role of CEO at HP, their stock has plummeted 50%. It’s not difficult to see why.

First you throw away billions in reserve cash for pricey mergers and technology grabs, such as their $1.2bn purchase of Palm to use that technology in their intended webOS. You launch a product and boast that its going to blow Apples iPad out of the water, then wait a year, and then sideline the entire lot, and oversee a fire-sale of the $499 tablet for $99 after you announce you’re no longer going to support it. So that’s $1.2bn (at least) gone down the drains.

Next, you could try your hand at raising your financial estimates twice…..and miss them twice. And since you’re in a spend-thrift mood (and because it’s the only business model you really know and understand) you announce plans to buy British business software company Autonomy for $10 billion, because it makes enterprise software just like SAP.

And lastly to really piss off the investors and corporate clients, you announce that you are no longer going to support the PC and peripherals business, perhaps spinning them off, perhaps not…you can’t quite make your mind up.

Never mind that the PC business feeds H-P’s more profitable businesses. Dumping it is a beautiful absurdity that one analyst, Jayson Noland of Robert W. Baird & Co., described as “like McDonald’s getting out of the hamburger business.”

And their latest full page advert in this weeks FT (see below) would suggest that they STILL haven’t been able to make up their minds at HP.

It starts off quite determined, stating that they intend to spin-off their PC business into a separate company. But it ends with the paragraph that HP “now more than ever, is committed to the future of personal computing”. I’m sorry, but you either want to stay in, or want to get out of the PC business. This indecisiveness from a CEO, and a board to continues to back their CEO, clearly indicates that their business compass is no longer working. In fact, I think the day Mark Hurd left HP, he that compass left with him.

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  1. Pingback: HP – Captain Of Industry Suffers Mutiny | IrishmanAbroad.com

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