Happy (Belated) Anniversary, Meg Whitman?

by Alyssa Oursler | September 27, 2012 11:40 am

[1]CEO Meg Whitman was stepping aboard a big-time fixer-upper when she took the reins[2] at Hewlett-Packard (NYSE:HPQ[3]) a year from last Friday — and the warnings came from all around.

Right off the bat, InvestorPlace Editor Jeff Reeves didn’t think there was a chance[4] that Whitman could inspire any change, much less stop the “musical chairs” in Hewlett-Packard’s C-Suite

And as Marissa Mayer took over at fellow dumpster fire Yahoo (NASDAQ:YHOO[5]) months later, I questioned each CEO’s false idea that she would be the one to change her respective bad boy of the business world[6].

Even Cisco (NASDAQ:CSCO[7]) CEO John Chambers has since said he would’ve advised her against taking the tough job[8].

Well, haters gonna hate. But despite the doubt, Meg and HP still made it to the one-year mark of their time together last week. So, first things first:

Happy belated anniversary.

Sure, it’s nothing compared to the 50 years of marriage my lovely grandparents are celebrating, or even close to the average CEO tenure (around 8 years), but it at least deserves a nod considering Whitman is the sixth chief to take over in the past five years.

That’s right — HP has gone through more CEOs in the past half-decade than it did the 68 years before that.

As they do in the great little season reunions of your favorite reality TV show, let’s take a quick look back at Meg and HP’s time together so far (cue the slow, sappy music):

• In Whitman’s first year, HPQ stock lost just over a quarter of its value.
• In Q2, the company’s profit fell by a whopping 31%.
• In Q3, HPQ posted its worst-recorded loss in company history.
• Revenue and earnings dropped year-over-year each of the past four quarters.

Well … with the one-year mark reached this way, it’s safe to say the honeymoon phase isn’t just over — it never really existed. The fact Whitman — heck, even HP — is still around at all seems to be the only thing worth celebrating.

To be fair, it’s not like Whitman should shoulder all the blame. Hewlett-Packard came with its own bundles of baggage, including:

• A changing technological landscape to which it had failed to adapt.
• The aforementioned revolving door of CEOs.
• Almost $30 billion in buyouts since 2008, and 42 total acquisitions since 2005.
• The resulting lack of focus and massive debt.

Or to sum it all up (as Jeff Reeves did): HP, even before Whitman stepped in, was the “embodiment of everything that’s wrong with corporate America.”[9]

Of course, now that Meg has had a year to figure HP out, mature and iron out the wrinkles, will it be smooth sailing from here? Doubtful. This ain’t no romantic comedy. Even though Hewlett-Packard kept Meg around long enough for us to remember her name, that doesn’t change the fact that the company still is crumbling.

Whitman has gotten serious and now throws around words we want to hear[10] like “refining focus,” “tablets,” “smartphones” and “the cloud.”

But talk is cheap.

HPQ has had an on-again/off-again relationship with smartphones and tablets, so it’s hard to trust the company there. It acquired Palm before Whitman came on board, moved into the mobile-platform world, then moved back away from it mere months after its first tablet launched.

Hewlett-Packard made rumblings this year about a possible new Windows-based 8 tablet, but right now, it looks like the offering only would be for enterprise users[11]. As for the smartphones, there’s talk that HP could pursue that path by snatching up fellow struggling tech company Research In Motion (NASDAQ:RIMM[12]). Maybe two wrongs could make a right, but I’m not holding my breath. As Jeff Macke of Yahoo! Finance put it[13], the move “would be consistent with HP’s history — but only in the worst possible way.”

Not to mention, you’d still have to create an enticing product and fend off Apple (NASDAQ:AAPL[14]), Samsung and the like. If you’ve paid attention to RIMM lately, you know that hasn’t been its strong point of late.

It’s hard to figure out exactly what is keeping these two together at all. Meg and HP might have survived their first year, but neither is making the other better.

Instead, this appears to be a relationship that sputters along, making the rest of the world feel a little bit better about our own relationships — and making us all wonder how much longer the two of them can last.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2012/09/happy-belated-anniversary-meg-whitman-hpq/

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