The first year of Meg Whitman’s tenure at Hewlett Packard
has not been fun. Challenging? Yes. The
company hit a 52-week low of $16.23, in late September. Its 52-week high of $30 was in mid
February. When Whitman took the reins of
the company in September of last year, the stock was trading at just under $23. So investors have seen the value of the stock
decline of about 30% during year one.
Whitman gets a
C- for year one. Revenue, earnings,
stock price, market share are all down.
Many proper decisions to turn the company around are taking place. The numbers are not there yet. Whitman stated when she took over the reins
that this would be a multi-year project.
According to SF Gate, Whitman is
betting that refining the company's existing strategy, rather than making
radical shifts, will help reverse the company’s troubles.
Dell has been suffering over the same timeframe. From September 22 to September 28:
- Nasdaq – up about 28%
- Dow Jones – up about 26%.
- Hewlett Packard - down about 25%
- Dell – down about 29%
With the exception of March and April, Hewlett Packard and
Dell have been trending downward at about the same rate. Click on the graphic to enlarge it.
The big day will be October 3, when Whitman discusses her strategy for HP at an analyst conference.
Some Brief Observations
Autonomy - Autonomy has been a disaster for Hewlett Packard
over the last year. Jefferies analyst
Peter Misek is advising investors to sell HP's stock, but is warning that HP
could be heading for another huge write-off, of around $3 billion. http://www.businessinsider.com/analyst-says-hp-may-write-off-3-billion-2012-9
The 27k layoffs – Layoffs, retirement, attrition. This is good for the company, ultimately.
Continuing to lose laptop market share to Dell and Lenovo –
bad. Its share of PCs dropped to 14.9
percent in the second quarter, while Lenovo's share has increased to 14.7
percent, according to Gartner.
September introduction of “Stylish and Affordable Consumer
and Business PCs” and hoping to “Help Businesses
Maximize Productivity with Powerful New AMD-based PCs” – HP is trying their
hardest to reverse the loss of market share.
Introduction of new entry-level, web-connected Designjet ePrinters
- They are betting that some people will always need to be printing. Betting on the razor blade strategy here.
HP also had a September introduction of what they are calling
the industry’s first web-connected, entry-level printing solutions for
architecture, engineering and construction (AEC) students and professionals. This strategy is to make in-house, large-format printing accessible to
more users.
The trend towards people printing less from their
laptops/desktops – bad. Cartridges are
one of Hewlett Packard’s razor blades.
Announced intention to offer a mobile phone – bad. This is a crowded market. Hewlett Packard will be a late entrant. "We have to ultimately offer a
smartphone because in many countries of the world that is your first computing
device. You know, there will be
countries around the world where people may never own a tablet, or a PC, or a
desktop. They will do everything on the
smartphone. We're a computing company;
we have to take advantage of that form factor," Whitman said, according to
a transcript.
The on again, off again tablet - Mixed thoughts on this. An HP tablet may be successful only as a
niche product. They are late. The market is crowded. This means downward pressure on prices and
margins unless HP comes up with something unique.
Spinning off Web OS into Gram - If it is going to be successful,
this was probably the only way to do it.
Additional security solutions announced in September – Excellent. HP is betting heavily on security. In a down market, companies slow their
investment in security, they do not slash it. This included new features to HP
Assured Identity, Security Operations Consulting services, a new release of
ArcSight Enterprise Security Manager. They
also announced the introduction of the HP TippingPoint NX
Platform Next Generation Intrusion Prevention Systems (NGIPS). I don’t know about that last acronym! Back to the conference room for the naming committee.
New virtualization solutions announced in August at VMWorld –
Very good. They announced that they were
expanding their HP Converged Cloud portfolio with new solutions for VMware
vCloud® Suite 5.1. This is a growth
sector, regardless of the different definitions people are using for "cloud".
Revenue/earnings - Bad.
Four consecutive bad quarters. Enough press. Enough said.
Look for major articles on Hewlett Packard, October 4. This is the day after the analyst meeting.
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