The autonomy acquisition seems to be the sore point. The reduced forecasts also seem to be a factor.
The stock market hates HP's new strategy
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Re: The stock market hates HP's new strategy
#12This was perhaps a good plan delivered with the poorest tact. The reality distortion field seems to be working in reverse for Leo & Co.
Moving toward an enterprise only strategy could make HP healthier and more profitable in the long run. It may even reap additional benefits from a consolidation of vision.
The PSG offers less and less synergy with the rest of the company with each passing year. Especially if WebOS is dead, which everyone knew but nobody wanted to admit.
The problem is HP could have kept webOS in zombie mode and discretely shopped around the company under the guise of licensing talks. Maybe HP already did that and its last option walked out the door.
And the same with the PSG. HP could have kept that under wraps and saved the news until the transition was nearly complete. "By the way, PSG, the #1 PC maker in the world, is doing great and we think it will do even better as an autonomous company which will happen as soon as the SEC allows it starting from today."
Instead HP delivered an abortion of bad news with little to no concern how it would be received. It's like Apotheker thought to himself, "this is clearly the best solution" and therefore it requires absolutely no explanation. Everyone should just "get it" like he does.
Re: The stock market hates HP's new strategy
#13I think a lot of it has to do with how the decision was... presented? 1. HP tablet sales fail. 2. HP warns of low earnings, then announces them. 3. Promise to make announcement only after market closes on the 18th. 4. Rumors that they are spinning Compaq back out. 5. Changes mind and makes announcement. 6. They are buying Autonomy (enterprise/IBM space) 7. They are shooting the mobile device effort in the face. That…
Realize that a different CEO was in charge at HP when the acquisition of Palm occurred and the new CEO came from an enterprise software company (SAP) and seems intent on turning HP into a company he knows how to run, rather than running HP as the company it is. Someone (maybe at precentral.com) likened it to when a sports team gets a new coach he recruits players for his style of game instead of building with the talent at hand, AKA "a rebuilding year".
I really, really hope they license WebOS to a good phone manufacture, The only real problem with the touchpad was underpowered hardware. I read somewhere that they got WebOS running once on iPad hardware for testing purposes and it rocked. WebOS on a dual core tablet has the potential to be really cool.
Re: The stock market hates HP's new strategy
#14Barron's nails it: a) "decision to cease all webOS devices (including the TouchPad) a mere 48 days after the launch" - Leadership doesn't know what they're doing w/acquisitions. b) "expensive acquisition of Autonomy" - $10b to jump into a new market via acquisition which we just proved we're not good at. c) "material layoffs" and "talent drain over the next 12-24 months' - I believe this. Current talent bails. Changi…
You forgot the "we're refocusing ourselves to our core competency as a software company". HP hasn't had competent software for years since HPUX and even then, it's questionable. They are a hardware/printer company so this is going to be a painful transition for them.
Re: The stock market hates HP's new strategy
#15Apotheker is taking the pain upfront, and undoing the damage wrought by Fiorina and Hurd over the last decade. He only took over in November 2010, and had to take some time to look at the business, and give the WebOS launches a chance.
But he's basically unwinding Fiorina's Compaq acquisition (as Michael Dell implied in his tweet yesterday), and Hurd's Palm/WebOS acquisition.
HP used to have a core value of only being in businesses where it could be at the leading edge technologically. Tablets, smartphones and PCs are areas where it's been a copycat.
Plus, Apotheker has likely identified as part of his review since starting (at the end of 2010) that consumer technologies aren't an area that it has a competitively differentiated core competence.
[EDIT for typos/clarity]
Re: The stock market hates HP's new strategy
#16Barron's nails it: a) "decision to cease all webOS devices (including the TouchPad) a mere 48 days after the launch" - Leadership doesn't know what they're doing w/acquisitions. b) "expensive acquisition of Autonomy" - $10b to jump into a new market via acquisition which we just proved we're not good at. c) "material layoffs" and "talent drain over the next 12-24 months' - I believe this. Current talent bails. Changi…
HP at a 20% discount is looking pretty good... ~50billion market cap, 5.8 p/e, 2% dividend, and they're getting out of unprofitable sections of their business. At risk of being cliche, think of it as failing fast and pivoting. Go big or go home kind of thing. Success is far from certain but it may be better than staying the course and crashing into the beach.
Re: The stock market hates HP's new strategy
#17I think a lot of it has to do with how the decision was... presented? 1. HP tablet sales fail. 2. HP warns of low earnings, then announces them. 3. Promise to make announcement only after market closes on the 18th. 4. Rumors that they are spinning Compaq back out. 5. Changes mind and makes announcement. 6. They are buying Autonomy (enterprise/IBM space) 7. They are shooting the mobile device effort in the face. That…
Was HP's expecting customers to kill each other over Touchpad?
HP is buying spree feels like recently dumped women who finds solace in shopping and dumping the new dress in overflowing closet.
On serious note, WebOS is praised all around for beauty and technical supremacy yet HP wants to drop it because the failed to execute one piece hardware. This is a very emotional and personal reaction.
Re: The stock market hates HP's new strategy
#18To be fair, they also missed on earnings. that's going to account for a fair bit of the drop as well.
Re: The stock market hates HP's new strategy
#19Barron's nails it: a) "decision to cease all webOS devices (including the TouchPad) a mere 48 days after the launch" - Leadership doesn't know what they're doing w/acquisitions. b) "expensive acquisition of Autonomy" - $10b to jump into a new market via acquisition which we just proved we're not good at. c) "material layoffs" and "talent drain over the next 12-24 months' - I believe this. Current talent bails. Changi…
That's a Wall St. view that completely misses the point. You could look at it very differently. The new CEO is making some bold moves to undo a bunch of bad decisions his predecessors made.
Buying Palm was nonsense. HP was never the company to make it work. Contrary to that, Autonomy, one of the best software companies in the world, is a good fit for HP's enterprise strategy.
Spinning off the PC business is very likely a step towards selling it altogether, similar to what IBM did years ago.
I think these are all steps in the right direction and I'm thinking of buying the stock once the current stock market panic has settled down a bit.
Re: The stock market hates HP's new strategy
#20I think a lot of it has to do with how the decision was... presented? 1. HP tablet sales fail. 2. HP warns of low earnings, then announces them. 3. Promise to make announcement only after market closes on the 18th. 4. Rumors that they are spinning Compaq back out. 5. Changes mind and makes announcement. 6. They are buying Autonomy (enterprise/IBM space) 7. They are shooting the mobile device effort in the face. That…
Realize that a different CEO was in charge at HP when the acquisition of Palm occurred and the new CEO came from an enterprise software company (SAP) and seems intent on turning HP into a company he knows how to run, rather than running HP as the company it is. Someone (maybe at precentral.com) likened it to when a sports team gets a new coach he recruits players for his style of game instead of building with the tal…
The thing is, the Touchpad already had a dual core cpu built in.
I can't really imagine that HP has put the effort of completely porting webos over to a different hardware platform, but I think that instead they might have tested the enyo toolkit on the iPad and have seen tremendous performance improvements. Those, I think, can be attributed to the superiority of MobileSafari (having hardware acceleration and having a very fast Javascript VM being the primary sources of better performance).