HP Reeling from Oct12 Shareholder/Analyst Call

Wall Street and analysts are reeling from HP’s Shareholder/Analyst call yesterday. The stock hit a 9-year low yesterday. Meg Whitman and HP are signaling it’s going to be another couple of years before the company is back on track. That’s astounding.

I have to ask at what point in the last decade was HP truly “on track?” What does “on track” look like?  I don’t think HP really knows.  HP simply knows it’s off track.

One quote stood out yesterday:

 When Todd Bradley took over the Printing and Personal Systems business, he was surprised to find that we made more than 2,100 laser printers. In every business, we’re going to benefit from focusing on a smaller number of offerings that we can invest in and really make matter. By the way, we have plans to cut those laser printer SKUs by about — by nearly 50% in 2013.

Cut it in half in 2013?  I can’t imagine the lack of economies and negative supply chain implication of having 2100 laser printer SKUs. This is an incredible number.  To think that they will have to continue with that number for the better part of another year is puzzling. And, to think they hope to only cut it in half in 2013 means they’ll still have over 1,000.

How about cutting it by 75-80% from the current 2100.  How about looking at a strategy to reduce the number of SKUs by modularizing the products?  This would mitigate supply chain and channel distribution issues.

There’s more that’s troubling.

  • For one, a “year” doesn’t need to be the smallest time unit for change to occur. In many businesses, a month or a quarter is sufficient to get a lot accomplished if people are motivated. HP needs to tighten up its timelines dramatically.
  • The longer it takes to make critical changes in a business, the less likely the things essential to moving the needle on the business  will occur. Where is the sense of urgency?
  •  HP leadership doesn’t have 2-3 years to ease into the changes. Investors won’t tolerate slow, steady progress. We’ll get another regime change and be right back talking about what needs to happen.
  • There is really no proof that HP knows what the right things to do are and has a plan to execute.
  • Cutting and downsizing–while necessary–won’t improve morale or the culture at HP. What is the plan to energize the team, customer, channel partners and the marketplace?

For too long, HP has just been going through the motions. What I heard yesterday is that will continue albeit with slightly more urgency.

Something’s got to give. I don’t think HP knows what that is yet. Where will HP be in a year?  Still stuck?

Dave Gardner, Gardner & Associates Consulting http://www.gardnerandassoc.com

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One Response to HP Reeling from Oct12 Shareholder/Analyst Call

  1. Out of the park, AGAIN! Hello David- Assuming that someone at H-P can both read and think, This should be sent to someone like Meh Whitman. Confusion, confusion, & confusion seem to be the main products/services they offer. They need David Gardner to do a quick and forceful pruning of the redundant, redundant, & redundant products. James Cayton, Ph.D.

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