Lacking neither talent nor resources, Hewlett-Packard
Why am I so down on this stock? Growth has gone missing. Revenue fell 3% in the second quarter. Non-GAAP earnings per share declined more than 20%. Cash from operations took the biggest hit, falling more than 37%. HP is a shadow of the financial juggernaut it once was.
Stewardship is an even bigger concern. Former eBay CEO Meg Whitman may very well prove to be a decent or even good chief executive, but HP's board (find the members here) has been so toxic that there's little chance of meaningful change taking place while the existing group is in control.
Fortune recently examined the dynamics at work at HP in a not-very-surprising feature that explores details most of us already knew, but which are nevertheless troubling:
- Someone -- presumably on the board -- leaked details of a poor third-quarter report in the spring of 2011, forcing the company to accelerate its earnings announcement.
- The board backed, and then backed away from, a plan to spin off HP's PC business.
- Executive Chairman Ray Lane has apparently told employees he's ready to take Whitman's "training wheels off," suggesting that any turnaround plan must first run through him.
But again, this is just a sampling. The point of the Fortune piece is that HP's board has routinely waffled its way to years of incompetent leadership. Lane backed former CEO Leo Apotheker and then didn't. The board backed a tentative plan to spin off the PC division before it backed off.
History repeats itself
And yes, I'm talking about the current board. Not the one that approved a $35 million severance payment for former CEO Mark Hurd, but the one that decided Apotheker wasn't worth his $1.2 million annual salary just 11 months into his reign.
Hurd, meanwhile, has gone on to lead Oracle's
And no, before you ask, firing 20,000 people doesn't count as a strategy -- not when cost-conscious PC peer Dell
This is my second time betting against HP. The last worked out well in theory, though I didn't mark my pick in my CAPS portfolio. I'm not about to make that mistake again and give up what would have amounted to a 48% gain as of this writing.
I get no joy from this call. Anyone who's ever worked in Silicon Valley (as I have) can tell you there's wide admiration for what HP was and could be. Seeing the titan teeter is like watching an old friend suffer from Alzheimer's. HP has forgotten how to be great, thanks mostly to a talented collection of individuals we call the board of directors but who, as a group, behave like corporate Kardashians for their level of dysfunction.
Priced to move
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