From The Sip Trunking Experts

TMCNet:  Hewlett-Packard can right its ship, but better hurry and avoid more foul-ups, experts say

[November 22, 2012]

Hewlett-Packard can right its ship, but better hurry and avoid more foul-ups, experts say

PALO ALTO, Nov 22, 2012 (San Jose Mercury News - McClatchy-Tribune Information Services via COMTEX) -- Despite Hewlett-Packard's (HPQ) startling admission that it was bamboozled into spending billions of dollars more on Autonomy than the software company was worth, many industry experts haven't given up on the tech giant.

They say HP still has a chance to clean up the mess it's made of its business, if the company builds on its most promising products and continues to streamline its operations.

But all of this needs to happen at rocket speed, without any other damaging revelations. If there is no quick turnaround, and bad news continues to dribble out, they say, Meg Whitman -- who bears little blame for HP's woes after just 14 months as CEO -- could wind up losing her job.

"If there is one major snafu on her watch, I think she's gone," said Roger Kay, an analyst with Endpoint Technologies Associates. "The best thing they can do is no further disturbances." Revitalizing the legendary Silicon Valley behemoth won't be easy. Its sales and stock price have slumped and its executive ranks have been wracked by turmoil. Moreover, its $8.8 billion write-down of its $11 billion purchase of Autonomy in 2011 -- a deal in which HP claims the software firm's value was misrepresented -- has triggered intense criticism of the company and its top brass.

Still, some analysts contend it would be foolhardy for Whitman and her board to dwell on such blunders.

"Wasting time on Autonomy is not going to help," said Trip Chowdhry, of Global Equities Research. "HP should move forward. Whatever has happened, just think of it as a bitter pill." One major hindrance to HP's revival is that half of its $120 billion in sales for fiscal year 2012 came from personal computers, printers and related equipment -- businesses that are weakening fast as consumers turn to mobile gadgets and cut back on printing.

Some analysts have urged the company to sell or spin off its PC and printer business. Although Whitman has resisted that idea, HP has been moving into the mobile market. It recently introduced a tablet. And although it had no luck selling smartphones a few years ago, it is again developing one. Some analysts believe HP is too late to the smartphone business to succeed, but if it does, that could produce a significant chunk of revenue for the company.

Another promising niche for HP is its computer networking products, which have sold well lately. Moreover, Whitman is pushing HP to invest more heavily in so-called cloud computing -- which helps businesses operate on the Internet -- as well as in products to ward off computer hackers and analyze vast amounts of information.

And even with all the problems surrounding Autonomy, it's still vital to HP's efforts. That's because software is key to many of the areas that Whitman has emphasized.

Autonomy -- whose software helps sort through data -- "is a strategic asset for HP," according to an analysis by Jillian Mirandi, of Technology Business Research.

Mirandi's analysis also noted that HP has introduced a "slew of security products," some obtained from companies it bought including Fortify, ArcSight and TippingPoint. But while the security business could bolster HP's bottom line, she cautioned, another disturbing disclosure from HP could send potential customers running to its competitors.

But if HP continues to stumble along as it has the past several years, some analysts fear, investors might abandon the company before then. Others worry that morale at HP has soured, due in part to its recent decision to trim expenses by laying off 29,000 workers over the next two years, its biggest such reduction in history.

Disgruntlement can cause talented employees to quit and make it hard to attract replacements, said Baird Equity Research analyst Jayson Noland, adding, "if they don't address that as quickly as possible, it could get worse." The lethargic global economy poses another major concern for HP, whose dismal earnings report this week prompted Raymond James analysts to revise their forecast of how well the company will fare next year.

"Our previous view that the business was stabilizing is simply incorrect," they said in a note to their clients. "We think the rate of decline gets worse before it gets better." Still, it's wrong to assume Hewlett-Packard is at death's door, said technology analyst Patrick Moorhead, noting that the company has generally improved its earnings per share under Whitman, introduced some good new products -- such as its tablet -- and generated a healthy $4 billion in operating cash in its fiscal fourth quarter.

So despite Autonomy and other missteps, he advised, "people really need to consider calming down a bit on HP." Contact Steve Johnson at 408-920-5043. Follow him at

___ (c)2012 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at Distributed by MCT Information Services

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