This will be my last post on HP. Beating a dead horse will only create a mess.
Anyway, I had an accounting paper due Tuesday and one of the questions required that I present why it's good or bad to invest in HP now. My response is below. But before that... I just found out that HP's been talking to Gateway about ....... ... buying them!? more. And Sorebrek does an interesting reflection on the cause of her firing through personality types.
As a team, we recommend not investing in Hewlett Packard at this time. There are several key reasons we came to this conclusion. 1) The HP and Compaq merger has been deemed a failure by the HP board. a. It was hoped that by merging with Compaq, HP would be able to take advantage of the highly profitable service accounts as well as superior hardware to improve product appeal and improve its’ portfolio of service-oriented business accounts. It has been nearly 3 years and company profits for PC’s and service in 2004 were 210 million compared to the printer business, which brought in 2.7 billion. HP’s own pre-existing printer business has been the only significant profit area of the company. 2) HP has been unable to meet financial forecasts for several years and will likely miss forecasts in the short term future. Forecast Fiscal 2003 Actual Fiscal 2003 Actual Fiscal 2004 Enterprise Systems 9.2% 1% 1.1% PC’s 3% .1% .9% Services 13.7% 11% 9.2% 3) With Carly’s recent exit out of the company, the board has made it clear that they were either unhappy about her strategy or execution. In last months Fortune magazine, an interview with Carly quotes her as saying that execution was indeed one of her two biggest problems over the last six years at HP. 4) It has been said that every computer hardware product that HP produces has the shadow of DELL Computers to deal with. Dell, over the last year increased revenue by more than 30% and continues to outperform sales in anything that HP has produced except printers, but is catching quickly in this area. 5) There is talk of splitting up the company now between printers and PC’s. This would isolate a highly profitable printer division, but leave the PC and Enterprise division struggling. As the PC side of the company maintains nearly 70% of the employees of the company, a failure to drastically improve profits over the next 5 years could prove fatal not only to the company, but to the U.S. economy as a whole. HP is in real trouble at this point and needs drastic change.
With poor performance, and questionable future directions, it would be unwise to invest in HP at this point for both short and long term investments.