The Next Time Someone Says Government Should be Run Like a Business – Tell Them to Take a Look at Hewlett Packard

Running a Great Company Into the Ground – Day by Day

Not just Conservatives, but most Americans simply do not like government.  Oh we like the services like national defense and highways and airports and education and environmental protection and the like, but we for the most part really don’t like government.  We don’t like the way it is run, we think it could do better.

But Conservatives are more vocal than most about their dislike of government.  They want to slash it substantially, and what they do want to keep they want to run like a ‘business’.  In fact they have just nominated a successful businessman investor in the hope that he will run the government like a business.  For them this means lower taxes, higher defense spending and a balanced budget. 

But as a lot of people have pointed out, government is not a business and what makes a few people very wealthy from private equity is not the same as making many people wealthy from having a strong economy.  In fact, business people are just as capable of running a great company into the ground as government is capable of running a great economy into the ground.  Case in point is Hewlett Packard, HP, one of the great technology success stories of all time.

On Wednesday the company announced that it would be taking an accounting charge of $8 billion related to its 2008 acquisition of Electronic Data Systems for $13.9 billion. 

For those not paying close attention, this is business speak for saying that the company we bought four years ago has lost over half its value, we essentially paid $8 billion to much for it. 

The current CEO is Meg Whitman, she of fame for losing the California Governor’s race in 2010 in a year in which Republicans triumphed nationwide.  Her tenure has not been great so far.

H.P. shares have fallen another 19 percent since Ms. Whitman took over, leaving it with a market capitalization of $38.34 billion. That drastic drop in the value of the company is one reason that H.P. was led, by accounting rules, to take the write-down for EDS.

Ms. Whitman still is being given a chance to succeed, as well she should be,

Few appear to be calling for the head of Ms. Whitman, however, who has said it will take several years to turn the company around. Since taking charge, Ms. Whitman has announced that H.P. will keep its PC business, and has consolidated top management.

and it will be interesting to see if she makes a better CEO of HP than she would have been as CEO of California.  But then she would have to be wouldn’t she.