Predictions 2013: Can Whitman dig HP out of its hole?
IT Business editor Brian “Action” Jackson is cracking the whip again, demanding more predictions from a soul wounded by the backlash against its predictions in re: Research in Motion yesterday. (Note to detractors: I'm slowly coming around to your point on there being room for more than three mobile OSes. Very slowly.)
Predicting the future of troubled companies is dangerous territory, fraught with strong opinion and best avoided. Less said the better. So, what's on the agenda today?
Oh, crap. Let's talk Hewlett-Packard.
HP's board of directors was famously called “pathetic” by Forbes contributor Eric Jackson, while the Wall Street Journal once wondered if it was the “worst board ever.”  Those sentiments were largely aimed at the company's record of hiring and firing CEOs. Mark Hurd was making progress clearing the smoking wreckage left behind by Carly Fiorina's purchase of Compaq (which had recently purchased mainframe company Digital Equipment) and failure to strike an over-priced deal to purchase Pricewaterhouse Coopers when he was sacked by the board over a sex scandal that involved no sex. Oracle's Larry Ellisons called it “the worst personnel decision ever” — boy, the ultimates fly when people talk HP — and put his money where his mouth was by hiring Hurd.
HP replaced Hurd with Leo Apotheker, recently fired by ERP company SAP, a man with no hardware experience whom half the board had never met. His first strategic move was to announce he'd spend the next year deciding whether or not to sell off HP's personal systems group, raising questions about the long-term viability of new product. His interregnum lasted all of 11 months.
When board member Meg Whitman was named CEO in September 2011, she quickly kiboshed the PSG spinoff, a widely applauded move. The markets originally rewarded this, with HP stock climbing steadily from $23 to $30 over the next six months. Since then, though, it's been a steady downward spiral through successive poor earnings announcements, climaxing with the write-down of $8 billion in November, $5 billion associated with the purchase of Autonomy under Apotheker, and the accompanying accusations of misrepresentation and shoddy auditing by Deloitte and KPMG. The lawsuits have just begun to fly, and the stock is mired at about $14.
There were high hopes for Whitman as a steadying hand, thanks to the dot-com monster eBay that she built. She had no tech hardware experience, but had market cred and a solid track record. All the same, HP's share price is a little more than half the price it was when she took over. She's repeatedly called the HP turnaround a multi-year journey. We've entered  Year 2 heading in the wrong direction. There's going to be a lot of pressure on Whitman to show results by her second-year anniversary in September. At HP's Discover conference in early December, she boasted that HP has a strong cash flow and is No. 1 or No. 2 in every market it's entered. Her strategy, built on cloud computing, big data and security, looks compelling from a technology perspective. I think the Street will see that, too, if Whitman can deliver a quarter or two without enormous write-downs and show the company's moving toward profitability. So … I say there's improvement at HP in 2013, but the company's a long way from being fixed.

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