So much for that short-lived rally in Hewlett-Packard (NYSE:HPQ), eh?
The tech giant sold off sharply Wednesday in anticipation of yet another ugly earnings report. Investors got what they expected, as HP reported a 31% drop in fiscal Q2 profits and reduced guidance for the year.
But it seemed that some were cheery about restructuring plans — HP announced it will cut 27,000 jobs — and investors drove shares up in after-hours trading.
That optimism quickly fizzled. The after-hours gains of about 8% resulted in HPQ gapping up at the open, but it steadily lost ground across the trading day to close at $21.77 — one penny lower than Tuesday’s close of $21.78.
Like I said, so much for the rally in HP.
Investors have good reason to be pessimistic. I’m not just talking about poor earnings and outlook either. As I wrote a day ago, Hewlett-Packard’s latest turnaround is just as doomed as its past efforts.
This is a company that has been struggling to find its way since 2005, after all. And what a coincidence! The current pricing of HPQ stock is the lowest since May 2005.
Here are the ugly facts about Hewlett-Packard stock performance:
- Down 15% year-to-date vs. 2% gains for the Dow and 8% profits for the tech-heavy Nasdaq in the same period.
- Down 48% since Jan. 1, 2011, vs. 9% gains for the Dow and 7% gains for the Nasdaq.
- Down 57% since Jan. 1, 2010, vs. 21% gains for the Dow and 28% gains for the Nasdaq.
- Flat since May 2005 vs. 22% gains for the Dow and 48% gains for the Nasdaq.
Between this week’s post about why HP’s turnaround is doomed and my rant last year about why HP embodies the worst of corporate America, I’ve offered up plenty of reasons for why this underperformance. This time, I’ve decided instead to put some of the curiosities of HPQ stock in graphic form for easy browsing … check it out above.
But looking forward, here are some more reasons to doubt HP:
Some say the former eBay (NASDAQ:EBAY) chief is the best thing HP has going for it. I disagree. Hewlett-Packard is trying to position itself as a corporate IT and cloud specialist, but Whitman’s experience is with consumers. She is distracted, serving on the boards of Zipcar (NASDAQ:ZIP), Procter and Gamble (NYSE:PG) and the nonprofit Teach for America, even as she leads HP.
She’s also 55, worth more than $1 billion and well-respected because of her eBay successes — so it’s only natural to wonder how motivated she is this late in a very successful career.
Whitman was a flashy hire for a board looking to save face after butting heads with Carly Fiorina, suffering scandal with Mark Hurd and giving up on Leo Apotheker after less than a year — but like a free-spending sports team looking to appease fans with a big-time free-agent signing, there is a big difference between creating buzz and creating positive change.