2012 Was Hewlett-Packard's Worst Nightmare

The year is nearing its end, and now is a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it deserves a spot in your portfolio.

Today, I'll look at Hewlett-Packard (NYSE: HPQ  ) . As a member of the blue-chip Dow Jones Industrials (DJINDICES: ^DJI  ) , the tech company has a long history of delivering computers, printers, and other computer equipment to consumers. But over the past several years, the revolving door to the executive suite has left HP in a terrible position to deal with changing trends in what consumers want from technology. Below, you'll find more on what moved shares of Hewlett-Packard in 2012.

Stats on Hewlett-Packard

Year-to-Date Stock Return

(45.3%)

Market Cap

$27.2 billion

1-Year Revenue Growth

(5.4%)

Net Loss, Trailing 12 Months

($12.65 billion)

Dividend Yield

3.9%

CAPS Rating

**

Source: S&P Capital IQ.

Why did Hewlett-Packard plunge this year?
HP has had a terrible year, as its past failures have finally come home to roost. For years, the company adopted the same strategy as rival Dell (UNKNOWN: DELL.DL  ) by focusing on the PC market, and for a long time, that was a winning game-plan. But as the shift to mobile devices like smartphones and tablets has evolved, HP has found itself scrambling to survive as the PC market declines.

Unfortunately, CEO Meg Whitman has inherited a mess, and she has admitted that she'll need a lot of time to right the ship. With masses of workers are laid off in an effort to cut costs, employee morale isn't on Whitman's side. Moreover, ideas like developing an HP smartphone seem destined to fail from the start, given the already huge competition in the space and the fact that Apple (NASDAQ: AAPL  ) and rivals like Samsung using Google's Android operating system already have a commanding presence within the industry.

HP's crowning failure, though, came just last month when the company said it would have to take $8.8 billion in write-offs from its purchase of information technology company Autonomy. Allegations of serious accounting improprieties by Autonomy have led to an ongoing debate between HP and former leaders of Autonomy, but the fact remains that the company remains mired in scandal and can't take quick action to recover.

HP's best hope is to emulate peer IBM (NYSE: IBM  ) by transforming itself into a better-diversified information technology business. That won't happen overnight, as this year's performance shows, but if it happens eventually, it could pull HP back up from its downward spiral.

Keep learning
If HP is down and out, where should you look instead? Apple has certainly been experiencing huge growth, but there's a debate raging as to whether Apple remains a buy. Learn more about the iDevice giant from Motley Fool senior technology analyst and managing bureau chief Eric Bleeker. He'll fill you in on reasons both to buy and to sell Apple, as well as what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thoughts on Apple, simply click here now.

Click here to add Hewlett-Packard to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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