But where do we go from here? What's the strategy?
The reason ex-CEO Leo Apotheker wanted to get out of PCs was quite simple. The margins were lousy. And the risks were increasing. It is no longer possible to just throw out Windows hardware and collect fat margins. That business model is broken because Chinese OEMs undercut you.
So Apotheker decided, double down on EDS. Double-down on cloud storage. Do what makes the most money and dump what doesn't make any money. He'd proven throughout his tenure that he couldn't take the next step – sell hardware through compelling software. WebOS was a piece of garbage.
OK. The shareholders revolted. The board revolted. The King is dead. Long live the Queen.
But what's the plan? Too much of what HP is selling is commodity hardware that Chinese workers will make for next to nothing, with little differentiation. How are you going to change that?
We have gotten one hint. They're working on ARM-based servers with a start-up called Calxeda. Get the chip makers to compete for your most lucrative business. That's nice.
But here's the deal. At its present price of $27, HPQ sells at just 7 times earnings. That means investors don't believe you're going to keep making money. But even at that price you're talking about a market cap of $56 billion. Too big to sell.
Break it up? Sell it in pieces? Buy Agilent (NYSE:A)? What?
Meg Whitman has been on the bridge for over a month now. At that time she said she would stick by former-CEO Apotheker's strategies. So that promise is broken. And there is still no plan.
You know, had she actually gotten that governor's gig in California and diddled for a month, without a plan, then broken a promise, I don't think even Republicans would like her much.
Investors shouldn't. Not at all.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wouldn't touch HPQ with a barge pole.