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Report: HP still has no idea what to do with itself

HP has had more drama than many of the Real Housewives, which is why a new story on Quartz is worth very little. The article claims that HP’s storied board is considering a breakup of the company’s business, which include computing, printing and services. This is something HP mentioned in a December proxy statement, but the story implies that Quartz reporters also talked to people about the potential for a breakup.

However the story has more hedges than an English estate. From the story:

The HP directors have discussed the details of a possible breakup scenario, but also the merits of the company staying whole, since a recovery seems to be slowly taking hold and its share price has gained steam since it fell below $12 last November, the people added. In January, the stock went above $17 and has been trading around $16.50 in recent days.

There is no overt pressure to break up HP—whose divisions include units selling computers, corporate servers and services—and no final decision has been made, the people said.

HP declined to comment on the possibly of a breakup, and the Quartz story, when I reached out for comment. However, the company (and its board) is probably as muddled as the story. With Meg Whitman as its third CEO in three years, HP faces a market crisis on top of a leadership crisis. The number of problems HP has are complicated and numerous, so its no wonder the board is unsure of how to best create “the most shareholder value.”

I can barely wrap my head around it. Let’s start with a bulleted list:

But as the board looks at HP’s future it’s likely eyeing Dell’s decision to go private today as a huge data point to consider. There many similarities between both companies in terms of the challenges to their hardware businesses, and the Dell transaction now leaves the company free to pursue businesses that might cannibalize existing server sales for the sake of getting in on the high growth scale out web market. I believe that Dell will use the freedom it has as a private company to come back as a player in the new infrastructure world. I’m not sure I have much faith in HP.

7 Responses to “Report: HP still has no idea what to do with itself”

  1. I can comment on the cloud portion. HP doesn’t really understand what the whole cloud thing is beyond their attempt to use it to sell hardware to enterprises. In any discussion I have regarding cloud computing HPs name is something of a joke.

    They do have some good hardware but they don’t know what to do with it I think in response to the market changing.

  2. I'd rather not say

    I’m currently looking at my first termination of employment thanks to working with this wonderful company. Externally it appears a mess, internally it’s a million times worse.

  3. HP was dead a little of 10 years ago with the Hewlett family lost a key vote by just a few percent. I forget the exact details but it was a very public fight.

    Since then the idiot board members slashed R&D spending and created an aimless organization with no future. This is the realization of that lost proxy fight.

    The shareholders are getting what they voted for, short term profits and no future.


    • Just to straighten things. The debate with William Hewlett 12 years ago was about the refusal by HP to break out its printer business. And a majority of shareholders decided it was not a good idea. Second, slashing R&D costs was the responsibility of Marc Hurd, now at Oracle.

      Meg Whitman is working at rebuilding the company, re-investing in R&D, in areas such as project Moonshot, the next generation of servers, memristor, the future of storage etc. So, if I were you, I would not underestimate the company as you guys are doing. I’m appalled about the little research done by GigaOm prior to publishing such articles that are miles away from the current HP reality.

  4. This is a rumor. Many articles are already coming out with an update saying it is a false rumor. The media should be more careful to distinguish between what is a rumor and what isn’t.

  5. How can you not have faith in HP, they have MEG WHITMAN running the company! Why, she ran eBay, that surely gave her great insight into how to run a company selling computing and consulting services, computers, and printers that require bloated drivers and over-priced cartridges. And just recently, they announced a $329 Chromebook! Meg and HP are rolling now.

    Actually, I heard the board asked her what she thinks the company should do, and she said “I have no idea. Why are you asking me?”.

    Maybe they should bet everything on the memristor.

    Oh, and Dell isn’t going to do any better. Anything they could do as a private company they could surely do in their current configuration. The going private thing is just a way for Michael Dell and the PE firm to make a few bucks. Really, do you think they have some secret plan to increase their profits, and they just don’t want to share it with their current shareholders? Nah, they figure they can buy a company with $60B in revenues for only $24B with debt, pay off the debt in 4 or 5 years, and then float the company again for maybe $20B, and still come out ahead. They’re just trading stocks, that’s all.