7 HP Miscues And Mistakes6:30 PM EST Wed. Sep. 19, 2012
Sources have told CRN that HP CEO Meg Whitman and the HP board of directors explored options for selling its Electronic Data Systems (EDS) outsourcing business. HP denies that is the case. But, there is no denying that HP's trouble with the EDS acquisition is one of a number of HP miscues and mistakes in recent years. Here's a look at seven of them.
When HP acquired EDS in 2008 for $13.9 billion under former CEO Mark Hurd (pictured), there were high hopes that the deal would allow HP to go head to head against IT services giants like IBM Global Services. But, EDS was considered a red-headed stepchild and never fully integrated into HP. The result: HP took an $8 billion accounting charge in the most recent quarter related to the acquisition of EDS.
HP's acquisition of Palm in 2010 for $1.2 billion is another major missed opportunity. When the deal was announced, HP partners viewed it as HP's blockbuster bid to compete head to head with rival Apple in the smartphone market. But, just like the 2008 EDS acquisition, HP has been unable to deliver, this time in a market that has helped drive Apple shares to pass the mind-boggling $700 mark. As for HP, the company in 2011 took a $3.3 billion charge related to Palm. HP shares were trading at $18.10 late in the day on Wednesday.
Oracle CEO Larry Ellison called it the equivalent of Apple's decision to push aside Steve Jobs in 1985. To say that HP partners considered it a mistake when the company's board of directors gave then CEO Mark Hurd his walking papers in August 2010 is an understatement. Ellison, of course, hired Hurd as president (pictured). And HP's pain has come to be Oracle's gain. HP partners, for their part, say it was Hurd's leadership that transformed HP into a sales driven machine that delivered for investors, customers and partners.
If HP partners were left dazed and confused by HP's decision to fire Hurd, they were overjoyed when HP fired Leo Apotheker as CEO on Sept. 22, 2011, after a mere 11 months on the job. They say the HP board's decision to hire Apotheker goes down as one of the biggest corporate blunders ever. CRN reported on the day that Apotheker was hired as CEO of HP the move left "some people scratching their heads." Partners now say it was that decision to hire Apotheker, who also was fired as CEO of SAP, that put HP into a tailspin from which it has never fully recovered.
August 18, 2011. It is a day that has come to live in HP infamy. All at once, HP announced that it was acquiring Autonomy for a mind-numbing $10.6 billion in cash and at the same time said it was exploring the possibility of selling off its then $41 billion PC business and that it was discontinuing its Touchpad tablet along with WebOS phones. Of all the moves, it is the high price that HP paid for Autonomy that hangs over the company like a black cloud. Fortune magazine has reported that HP CFO Cathie Lesjak at the time objected to the deal on the grounds that HP was paying 11 times revenues when comparable companies were priced at around three times revenues.
HP's decision in August 2011 to consider "strategic alternatives" for its $41 billion PC business through a spin off or another transaction struck partners selling HP PC products like a blow to the gut. The announcement led to a blizzard of questions from customers with regard to HP's commitment to the PC business. Even now, more than a year later, partners find themselves answering questions with regard to HP's commitment to the PC business. HP CEO Meg Whitman (pictured) reaffirmed the company's commitment to the business in October 2011, but the damage had already been done.
HP's decision to retreat from the Tablet and the smartphone market in August 2011 has left the company without product offerings in two of the fastest growth markets. HP is poised in the next several weeks to launch its first Tablet product since the TouchPad debacle. The HP offering is an expandable and serviceable business Tablet that is being backed up by one of the biggest channel enablement efforts in years. HP CEO Meg Whitman, meanwhile, has signaled in an interview with Fox Business News that HP intends to get back into the smartphone game.