HP’s Troubles Continue, But Does It Matter?

HP’s Troubles Continue, But Does It Matter?

Summary: In the wake of HP’s $8.8 billion loss on Autonomy, the real question is “Does it matter to HP customers?” Not really, says Forrester analyst Richard Fichera.

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HP seems to be on a tear, bouncing from litigation with one of its historically strongest partners, to multiple CEOs in the last few years, continued layoffs, and a recent massive write-down of its EDS purchase. And, as we learned last week, the circus has not left town. The latest “oops” is an $8.8 billion write-down for its purchase of Autonomy, under the brief and ill-fated leadership of Léo Apotheker, combined with allegations of serious fraud on the part of Autonomy during the acquisition process.

The eventual outcome of this latest fiasco will be fun to watch, with many interesting sideshows along the way, including:

  • Whose fault is it? Can they blame it on Léo, or will it spill over onto Meg Whitman, who was on the board and approved it?
  • Was there really fraud involved?
  • If so, how did HP miss it? What about all the internal and external people involved in due diligence of this acquisition? I’ve been on the inside of attempted acquisitions at HP, and there were always many more people around with the power to say “no” than there were people who were trying to move the company forward with innovative acquisitions, and the most persistent and compulsive of the group were the various finance groups involved. It’s really hard to see how they could have missed a little $5 billion discrepancy in revenues, but that’s just my opinion — I was usually the one trying to get around the finance guys :)

But the real question is “Does it matter to HP customers?” What will be the impact on the tens of thousands of HP customers who have purchased millions of servers, massive amounts of storage, services, clients, and whatnot?

My considered opinion is that it really doesn’t matter at a tactical level. While I will continue to nudge HP when they deserve it, I feel that I also have a responsibility to be a voice of reason when things are being glaringly skewed by the mass media.

HP is a $120 billion company, and despite its stock price being in the basement (unfairly, so I think), HP remains at its heart a very efficient supplier of critical infrastructure for the modern enterprise. Its recent cycle of servers was fully competitive, and it continues to build on its franchise in the blade sector as well as innovate for the large number of legacy rack server customers. HP’s storage products, even if not industry leading, are more than adequate. Fundamentally, if you are interested in making sure your corporate compute resources will keep you competitive in the 21st century, HP is a perfectly viable and competitive supplier.

Most importantly, they have a core of excellent technical and managerial talent who remain seemingly undistracted by the corporate turmoil and appear to be able to do their jobs, sometimes seemingly despite the antics of senior management. Having spent four years at HP in the ESSN group, I know many of the key players, and as a team, they are world class, consistently turning out excellent products and serious about their stewardship of HP’s brand and customer base.

If you are a user contemplating the purchase of data center infrastructure such as servers and storage, the recent bizarre track record of HP’s management and board should not distract you from the fundamentals — evaluate HP’s products on their merits and HP’s ability to deliver required product and services to your company, not the media frenzy surrounding flawed judgment of current and previous executive management. HP is not going to disappear over the few odd billions of dollars of accounting manipulations. It will remain a serious competitor, and none of the current cycle of executive dysfunction should enter into tactical decisions (including multiyear contracts) about purchasing HP products and services.

Topics: Hewlett-Packard, Autonomy

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4 comments
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  • HP’s Troubles Continue, But Does It Matter?

    i wonder what happened to that smart son of one of the founder who went all out against the acquisition of compaq?
    kc63092@...
  • Does It Matter About Buying Products From A Dying Company?

    Yeah, it's true, what's all the fuss about? It's not like the products will become orphaned if/when HP goes bust, right? That any company that buys their assets will also pick up their liabilities, right?
    ldo17
  • "it really doesn’t matter at a tactical level."

    If you are buying commodities at a tactical level, no it doesn't. If you are working at a strategic level and making long term investments, yes it does.
    AdamS12
  • Depends...

    ...on how HP decides to make up for the shortfall, but a likely target for cuts would be tech support, which has a direct impact on customers.
    John L. Ries