Don't Give Meg Whitman The Benefit Of The Doubt

| About: HP Inc. (HPQ)

Don't give Meg Whitman the benefit of the doubt. Fellow SeekingAlpha writer Cameron Caine suggests HP goes to $40. Twenty is more like it.

Make no mistake: Hewlett-Packard (NYSE:HPQ) is a leviathan, filled with blubber. Trying to turn around this once great company is going to take a lot more than some tinkering.

I owned HP for 20 years before I gave up on it in 2007. It was trying to encompass all of tech. Buying more than it could ever digest. Wanting to get bigger for no other reason than to get bigger. Different management now. Same strategy.

It took years for HP to become a bloated behemoth. Along the way it bought everything in sight. Over the last six years alone, HP has gone on a $43 billion shopping spree, depleting its balance sheet of needed cash, all the while ignoring investing in organic growth. In the end, it acquired EDS, 3COM, Palm, 3Par, and the expensive $11.7 billion Autonomy.

HP now sells everything: laptops (19), desktops (22), and printers (60+). You can even buy 15 different calculators on its site! The company does the cloud. Sells enterprise. Servers. Storage. Services. It's become a smorgasborg of everything tech.

You can't do it all.

Imagine Boeing (NYSE:BA) selling everything transportation. Management acquires a railroad company. Adds cars, a truck line, maybe a shipping, and, of course, keeps aerospace. Why not tricycles too?

HP's so big even aggressive moves can't turn the company. For instance, HP is going head-to-head with Amazon (NASDAQ:AMZN) launching a public cloud service. Yet, because of its size, even if the venture is wildly successful, it is not going to move the needle. Per the WSJ interview with HP VP Zorawar Singh (emphasis mine):

As ambitious as the program sounds, Mr. Singh said the revenue from the public cloud business will have little initial impact on H.P.'s annual revenue, which are in excess of $100 billion. His project will be judged, he said, as much on how well it helps other parts of Hewlett-Packard's business as it is on its own revenue. "We do everything from laptops to cloud computing," he said.

HP needs radical change. It doesn't have the luxury of time to effect a turnaround.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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