By Matt Burns
Hewlett-Packard (NYSE:HPQ) was once the king of Silicon Valley. Not anymore. After years of executive turnover, the company has lost its soul although the money keeps pouring in. Meg Whitman intends to right the massive HP ship and just outlined an ambitious five-year plan that promises new products by financial year 2014 and finally growth by 2015. So three years from now. Gah.
Whitman took over for ousted Leo Apotheker in September 2011. Apotheker replaced Mark Hurd in 2010. Today during HP’s Securities Analyst Meeting,Whitman blamed HP’s current position on this constant turnover. She indicated it caused multiple inconsistent strategies. And she’s right.
While the PC landscape was radically changing, Hewlett-Packard, the largest PC company in the world, experienced unprecedented leadership changes. Now, in the latter half of 2012, the unofficial definition of a personal computer has shifted to mobile devices. HP does not have any mobile devices anymore. Under Mark Hurd, HP purchased Palm for $1.2B, but the first product from that venture was released under Apotheker. HP killed the TouchPad after just 49 days on the retail market.
HP’s revenue and non-GAAP operating margin are dropping quickly. Whitman has a huge task on her hands. The company rolled out several department heads at today’s meeting but Whitman gave the overview. She aims to get HP back on track but it’s going to take some time with growth not expected before FY2015. The company doesn’t expect to reap the benefits from new products until 2014. 2013 will see more financial loses and, yet, this year the company plans to continue cutting costs (i.e. layoffs).
This plan promises changes in HP’s four primary businesses. Enterprise Services will get an entirely different operating model. Likewise the Enterprise Group plans to further utilize the cloud (*cough* *cough*). It will simplify the operating model by reducing its product line in the Printing and Personal Systems group while implementing a new cloud-based consumption model for the Software group.
The key to HP’s turnaround will come from stability. Hopefully Whitman can dramatically outlast her predecessors and provide the company with the leadership it needs. HP is a founding member of Silicon Valley. It used to stand for pure innovation and radical change. HP lost its way years ago and while its sheer size hinders quick course corrections, the company will find its way back to the path blazed by Bill and Dave those years ago. Hopefully.