It's not so much the firing of Leo Apetheker and his replacement by board member Meg Whitman. It's not even the brevity of his tenure, following Mark Hurd, or the obvious dysfunction of the board, or even the destructive tenure of Carly Fiorina, that has investors scurrying for the exits like rats on a sinking ship.
It's something much more basic. Hewlett Packard (NYSE:HPQ) no longer knows what it stands for. That's the problem.
Back when Bill (William Hewlett) and Dave (David Packard) ran the company, it was fully capable of making a mistake. It made some doozies. But you knew what HP stood for, and you knew what its values were. HP stood for excellence, and it valued engineering.
HP invented a lot of things we take for granted, like casual Fridays and coffee breaks, as well as a lot of things we've forgotten, like oscilloscopes. HP was the father tree from which all of Silicon Valley sprang.
Those values did not die with the founders, but starting way back in the days of Lew Platt it was obvious the company was losing its way. Its product lines were becoming disparate, its corporate culture thin, "like butter spread over too much bread."
Robert Cringely writes that the fall really began in 1999, when Platt spun out Agilent Technologies (NYSE:A).
While this made sense at the time and even today, there were unintended consequences of that spin-off - the loss of HP’s corporate soul. You see Hewlett Packard was in 1999 an instrument company that made a hell of a lot of money from printers, not a printer company that also built instruments.
The Agilent spin-off transformed HP from being an engineering company to a product company, from being an engineering firm to a manufacturing firm. And here's a factoid to consider. In the last 10 years Agilent shares are up 55%, HP's 27%.
The best corporations stand for something. That's what corporate culture is all about. Without its soul, HP's fall was inevitable, just a matter of time.
I'm not saying Meg Whitman can put humpty-dumpty back together again, or that HP should buy Agilent. But it might make some sense, some time in the next week, if she met Agilent CEO William Sullivan for a drink somewhere quiet, and asked him "What would Bill and Dave do?"
Until she can figure out an answer for that, sell HPQ and sell it short.