HP: Where is it going?

It is clear HP is in trouble. But what of that? How bad is it and what should any of us do who follow this company?

I am gobsmacked at the amount of back channel conversations I've been hefting around HP. Mostly from people that truly want to understand what the heck is going on at this beleaguered company. I cannot provide direct insight except to the limited extent I receive Twitter DM's on this topic from people who claim special knowledge. That usually means they've had coffee with a pissed off VP. It does include well placed HP insiders who are scrambling for position. Be that as it may be and understand that stress does odd things to otherwise rational people.

Let's make no mistake. HP is the first in what could be a who's who of Silicon Valley titans that are/will be blasted by the chill wind of change. Unlike the past where temporary hiccups could be overcome, even the usually intellectually challenged Wall Street analysts are smelling blood in the water as they scramble to realise their models are not what Excel was telling them. As for the rest, it feels as though everyone has an opinion about HP.  Can we all please step back and think for more than the required attention span of a passing Tweet?

Let's get it out on the table - HP is a mess. Are they alone? Not at all. I can count at least Microsoft and Cisco that are on PR disguised life support. Dell likes to quip at HP's expense but I sense its CEO needs to take a long hard look at its defensible business before getting a cheap laugh at anyone else's expense. There are many others. But let's deal with what we see.

When Leo Apotheker, CEO HP was appointed who else was there to pick up the poisoned chalice Mark Hurd left behind? No-one. Hurd had done exactly what the financial markets expected of him without thinking for one nanosecond about the long term future or viability of this once great company.

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Market maker analysts - along with pretty much everyone else - were prepared to stand by and watch Hurd deliver stellar results without ever questioning the extent to which he was gutting the company of the very talent that sustains Silicon Valley survivors, Or rather what talent was left after Lew Platt and Carly Fiorina had done their work.

As a conspiracy theorist I can't help but wonder if Hurd engineered his own demise so that the dung pile he left behind would not come back to haunt him while quietly landing a job with Larry Ellison, his tennis partner and CEO of Oracle. Enter Apotheker stage left. Or rather not, as Ellison embarked on a pre-appointment hatchet job attempting to take Apotheker down before he had time to put his feet across the HP HQ doormat. Such is the crappy to and fro among enterprise companies that spend millions with media and analysts burnishing their holier than thou image while at the same time bad mouthing competition.

So Apotheker turns up with webOS and the TouchPad play in full swing. Neither of which could be regarded as a serious contender to Apple's supremacy. He inherits a crappy, low margin PC business. He has a muffed enterprise core processor story to unravel. Services in the guise of EDS is on its knees. Even the once 'liquid gold' printer business is looking wobbly. And somehow - this enterprise sales person is supposed to wave a magic wand?

Earnings call no.1 - good morning people - we're going to disappoint.

Earnings call no.2 - same again

Sure enough, the financial analysts along with anyone else willing to listen are out rumor mongering about Apotheker's ability to solve problems, ably assisted by strategically placed puff pieces in the WSJ from Oracle that almost no-one chooses to question. Why would they? Ellison is news. Apotheker is in the coconut shy ready to be shot at by anyone with a rock in their hands. Something ready to be demolished in this Twitter driven attention span world. And then comes what everyone thought was a bombshell.

Last week, Apotheker did the one thing none of his predecessors had the honesty or courage to do: lay-out-all-the-crap. And ever since, anyone that wants to whore page views has been spewing mostly uninformed nonsense out there into the market. Shame on you all.

Did Apotheker execute well on selling a horror story? Rumors are the head of PSG didn't get to know that his unit is for the trash can until the night before it was announced. Shock, horror. Guess what? In all the years I spent reconstructing companies, the last person to hear about their soon-to-be-eviscerated unit was the guy in charge. That's what happens in the real world yet some people were prepared to pillory Apotheker over it. Get real. If you're a non-board divisional head there are only two reasons you get to have dinner with the CEO.

  1. You've blown out the numbers
  2. You're about to get your ass handed back to you on a plate.

Even the most optimistic assessment of PSG should have told that leader which reason applied. Why should any of us care except to the extent that Apotheker unskillfully managed the quiet throat slitting of an under performing unit.

Should Apotheker and his chief comms person Bill Wohl have handled it differently? Of course but how? HP's recent history has been one dogged by innuendo and rumor. With a ship the size of HP, how do you stop disaffected managers going to their favorite hack who in turn is only too eager for some 'scoop' on what's going on in the hope of being paid a few $$ more for page views? Such was the confusion that Wohl fell into the trap of mistaking our own Zach Whittaker for SVN. That has to say something profound about the chaos inside HP.

And on it all rumbles. John Furrier gets caught up in a cloud (sic) of his own invention claiming that 23 years following HP and dinner with (another) pissed off VP gives him some sort of insight into the HP chaos. Side by side, Ray Wang, CEO Constellation Research and I punt our views on what we see. Or think we see. It was great theater.

And therein lies the real issue. No-one truly knows what the heck is going on other than the fact HP is a mess. I can only speak from my knowledge and understanding of Wohl and Apotheker plus a passing understanding of some of the ex-SAP hires that have been brought to HP. That, combined with my understanding of Autonomy is the extent of my *real* knowledge. Everything else is what I am being told. To that extent, I am flawed.

At this moment in time, HP's history, its place as the founder of modern day Silicon Valley, its world changing inventions over the years matter not one jot. Important though they are historically we are witnessing a company that is in the fight of its life for survival. As I said at the top of this post - they are not alone - they've simply run out of loin cloths with which to cover their naked exposure to a market that has fundamentally changed.

If the armchair pundits do not give this company and its CEO the breathing room to figure out what to do then who else will come in and pick over the bones? You can argue that HP has had three opportunities to solve that problem in the guises of Platt, Fiorina and Hurd. All of them extracted huge personal value and walked away from a company that progressively has became a grotesque caricature of its iconic self.

Like him or loathe him, Apotheker may well be the only person with the will and guts to take on this massive problem, rebuild and establish stability for HP. Give the man the time he needs and in the meantime shut up and let him make his case. Having presided over insolvency chaos I do not envy his task. If he flubs the communication issue then beat up the comms team, have fun doing it if you must but please - move on. Instead, let's all concentrate on the substance of what is said. Crunch the numbers rather than big up the public cock ups. They make great theater but say nothing to the thousands of people who work for one of the world's most important tech brands. If you can't think of anything useful to say then keep quiet. Nobody cares and neither should they simply because your smart ass and mouth look the same.

Just as HP wasn't built in a day, its demise need not necessarily follow. Looking back with dewy eyes may be fascinating to those who dream about a past golden age but it won't resurrect the long since dead founders, messers Hewlett and Packard to weave their magic in this 21st century world. Let's all move on. Please.

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