Friday, October 5, 2012

Hewlett Packard Chief Meg Whitman Plays the “Lower the Expectations” Game

Are Investors Dumb Enough to Buy This – Well They Were Dumb Enough to Cheer Her Selection as CEO

This Forum has commented several times on the choice by Hewlett Packard to make successful e-bay executive and failed gubernatorial candidate Meg Whitman CEO of the faltering company.  The concern was that Ms. Whitman’s success at e-bay was illusionary given the evidence from her political campaign that she was not very good at running things.

Anyway, since she joined HP as CEO things haven’t been going all that well.  The company is in the process of firing 30,000 people, as though they thought there were 30,000 deadbeats in the organization.  And Ms. Whitman has apparently decided to bad mouth the situation.

While for now still the world’s leader in sales of personal computers, printers, and computer servers, Ms. Whitman said that in the coming year H.P. would see sharply lower revenue, declining operating margins, and a tough economic environment across most of the world.

Why do that?  Well here is the explanation.

Would you buy a used computer from this person?
Maybe, let's see

While the news was not unexpected, the vehemence of Ms. Whitman’s message drove shareholders to the exits. The company’s stock is down almost 10 percent.

It was probably what Ms. Whitman had in mind. Executives involved in her presentation, who were not authorized to speak on the record, said Ms. Whitman wanted to get as much bad news out at once, so the company could quickly focus on rebuilding, rather than struggling through several disappointing quarters.

Notice that this is how a politician would manage things.  But HP doesn’t need a politician, it needs someone who can turn the company around.  Time will tell if that’s what they have, the results so far, not so good. 

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