Why Is HP Such a Mess?

If there's one the thing market hates, it's uncertainty.

That capriciousness is weighing on Hewlett-Packard's (NYSE: HPQ  ) shareholders, judging from the stock's drop today on the news that eBay's (Nasdaq: EBAY  ) former CEO Meg Whitman will be stepping up to the plate to take a swing, displacing Leo Apotheker and confirming prior rumors. Investors are justifiably rattled by the merry-go-round slew of CEOs over the years; how long will Meg Whitman's ride last?

Here's a brief recap. Carly Fiorina served as HP's CEO from 1999 to 2005, when Mark Hurd took over until his high-profile ouster last year. Oracle (Nasdaq: ORCL  ) downplayed the sexual-harassment allegations against him and snapped him up in a heartbeat. HP's board spun the bottle and it landed squarely on an unfamiliar name -- Leo Apotheker, from German software maker SAP (NYSE: SAP  ) . Less than a year later, he's out, and now would-be California Gov. Whitman is leading the way.

Earlier this week, The New York Times came out with a must-read report on how the majority of HP's haphazard board voted Apotheker in without ever meeting him. They were "just too exhausted from all the infighting," according to one of the directors who opted out of a meet-and-greet. I thought I was exaggerating when I implied that the board hadn't given Apotheker's resume a look-see, but it looks like I hit it pretty close to home.

In statements that I'm going to go ahead and call disingenuous, Whitman and HP Chairman Ray Lane have both pledged to continue on the path that Apotheker embarked on in August. The duo has said that there are no immediate changes to those plans, and that the company continues to investigate the potential of spinning off the PC unit while proceeding with the purchase of Autonomy.

In my Foolish opinion, Apotheker got booted after a short year because the board didn't like where he was taking the company, contrary to their public statements of support. Whitman and Lane's comments on standing behind Apotheker's grand plan are probably meant to smooth over the transition and save the company some face amid the poorly handled debacle. I won't be surprised if Whitman chooses to keep its PC business and, who knows, maybe even revive the TouchPad.

Let's just hope she doesn't pursue any dubious acquisitions.

Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Oracle. Motley Fool newsletter services have recommended buying shares of eBay. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 23, 2011, at 6:40 PM, TMFNewCow wrote:

    Update: While this article was pending publication, CNBC reported that HP announced that it was keeping its PC business.

    - Evan

  • Report this Comment On September 23, 2011, at 8:57 PM, Techlog wrote:

    TMFNewCow, I don't see this news on CNBC?Do you have any link.

  • Report this Comment On September 23, 2011, at 10:07 PM, TMFNewCow wrote:
  • Report this Comment On September 23, 2011, at 10:15 PM, TMFNewCow wrote:

    Maybe "announced" isn't the most appropriate term, more like "said"

  • Report this Comment On September 24, 2011, at 11:47 PM, baldheadeddork wrote:

    To recycle a very (very) old joke - Mercedes is coming out with special models for HP execs. They won't have seats or a steering wheel, but that's okay because HP execs have lost their ass and don't know which way to turn.

    This company is such a mess. I'm not ready to predict their demise but I won't be surprised at all if they're broken up and sold off two years from now. The gulf between the value of the components and the market cap of the company is so vast, and the board is so criminally clueless, that I don't see how they turn it around.

  • Report this Comment On September 26, 2011, at 3:08 AM, kp1234 wrote:

    HP will shine again after paying the new CEO another $100M severance after 6 months.

    HP will shine again after the new CEO "cleans the shop" contributing to the horrible unemployment.

    HP will shine again on the backs of hapless contractors who are being worked to death over there in the name of disposable OPEX. Working 14+ hr days but permitted to charge only 8 hours and the loosey goosey accounting of comp. time which never happens.

    As the spouse of one of these contractors and hence "very familiar" with the extortion going on in California, is an open invitation to a class action lawsuit or a visit from EDD. My spouse works far more hours and sincere than the full-timers at this department so that they can report status to VPs thus furthering their career potential. No one will speak a word about this to even their spouses due to fear of retaliation if the word were to leak out. There are other suspected unethical stuff which I hear about everyday that sounds like cans of worms. Why do you think no one feels loyal to companies anymore as they were even a decade ago?

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