Wednesday, May 30, 2012

It’s Too Early to Tell Definitively, But The Performance of Republican Meg Whitman in the California Governor’s Race in 2010 May Have Been an Indication of How She Would Perform as CEO of Hewlett Packard

We Are Willing to Give Her More Time, Even if Shareholder Investors Are Not

Meg Whitman was a very successful private sector CEO (meaning she made zillions of dollars and cashed out) and so she decided that she would be a very successful Governor of California, despite lacking in any previous public policy or government employment experience.  She ran a pretty miserable campaign, wasted tens of millions of her own money and lost to a former Governor in a year in which Republicans dominated the elections.

Hewlett Packard thought they saw a good thing in all of this, and now that Ms. Whitman was not employed they snatched her up as CEO of the giant tech conglomerate.  Things have not yet worked out all that well.

Over the quarter, H-P's personal computer group, the world's largest, was the only major business that grew, and it was effectively flat with revenue of $9.5 billion.

H-P's printer revenue declined 10% from a year ago to $6.1 billion, and revenue in its services group fell 1% to $8.8 billion. H-P's group that makes products for businesses such as servers and storage systems saw revenue fall 6% to $5.2 billion.

Revenue in H-P's small-by-comparison software group grew 22% to $970 million, largely because of a $10.3 billion acquisition of Autonomy Corp. last year. But Ms. Whitman said Autonomy's revenue was down from a year earlier when it was a standalone entity, and that she was replacing the head of that business.

Investors are not happy.

So far, H-P hasn't fared much better under her watch. H-P shares hit a new 52-week low Wednesday before ending down 3.2% at $21.08 in 4 p.m. trading on the New York Stock Exchange.

Of course none of this is senior management’s fault, it’s the fault of the workers.  So thousands of them will lose their jobs.

 Co. HPQ -3.21% said it will lay off 27,000 workers as part of a massive restructuring plan to stem its declining profits and revenues, underlining the growing gulf between the technology industry's old guard and new generation.

Now HP is a big company, and 27,000 workers is not even 10% of its workforce but one has to wonder how 27,000 useless employees got hired in the first place.  Of course maybe they are not useless, maybe they are performing critical tasks and may they will be re-hired as consultants, thus obliterating the savings.

Ms. Whitman has been on the job for less than one year, and maybe she will get the job done.  But it seems she was hired more for her reputation then her performance, and in the business world, like in political races reputation does take one very far. 

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