Annex Bulletin 2012-09 November 19, 2012
A partially OPEN edition
Oracle Runs Out of Oracles (Analysis of latest quarterly results)
EDITORIAL ON INDUSTRY TRENDS
Updated 11/19/12, 11:00 AM HST
Analysis of HP's Fourth Quarter Results & Stock Performance
HP: Duped, Down and Out?
Disclosure of Autonomy accounting fraud, $8.8 billion charge, sinks HP stock to new 10-year low; time to start writing a eulogy?
HAIKU, Maui, Nov 19 - When a boxer is knocked down three times, he is usually considered to be down and out. Hewlett-Packard just went down hard for the third time in a little over two years. Its stock plummeted 12% to a 10-year low after the company announced an $8.8 billion charge due to alleged accounting fraud related to its last year's $11 billion acquisition of Autonomy, a software company.
What's even more embarrassing is that the disclosure of Autonomy's cooking of books comes on the heels of another blockbuster write-off HP announced in August ($8 billion, related to Mark Hurd's 2008 acquisition of EDS). So the world's largest computer company only two years ago is starting to look more and more like that sinking ship we depicted in a Feb 2012 report on HP (above right - ).
And all three of the HP ship's recent captains have disgraced themselves, each in their own way. No surprise there to anyone but the gullible or uninitiated investors (see our stories on HP below). But while the HP CEOs have come and gone through the corporate revolving doors, there has been one constant source of trouble: the HP Board.
We've quoted an East European proverb many times before - that "the fish always stinks from the head." In HP's case - that means the company directors.
It was their schizophrenic behavior and a cat fight between two women that led to a Carly Fiorina's ouster in Feb 2005. It was their paranoia that led to the Pat Dunn's spying scandal in 2006 that forced the resignation of the winner of that cat fight. It was a sex scandal that led to the downfall of Mark Hurd, the former HP CEO who once looked as if he could walk on water. It was the Board's gullibility and incompetence that led to both, Leo Apotheker's appointment as CEO and his dismissal less than a year later. It was the Board's gullibility and incompetence that led to picking a loser to replace a loser - Meg Whitman over Apotheker.
So why should we be surprised HP stock is at a 10-year low and trending lower?
We've also said several times before that the listing ship that HP has become cannot be righted until such time that the entire Board resigns. Alas, it may be too late even for that now. The HP ship may no longer be seaworthy. When it is sold, it may be sold only for scrap value. So stand by to see the rats and crew abandoning ship.
Which is a shame. Hewlett and Packard must be turning in their graves. They created a business winner. The Wall Street culture of "Greed Ueber Alles" turned it into a loser. Time to start writing another corporate eulogy...
A big company that swallowed big companies (EDS, Compaq) that had swallowed other big companies (DEC) - that all looked infallible at one stage of their existence - bites the dust. The bigger and greedier you get, the sooner you perish.
Sounds like a story of dinosaurs, doesn't it.
Happy bargain hunting
Happy Birthday, IBM! (IBM to turn 100 on June 16; what's the secret of its success?)
Apple Falls from Tree to Cloud, Then to Earth... with a Thud (Last major holdout joins race to cloud, but falls flat on first attempt)
Annex's 33rd Birthday (May 15, 2011)
Big Blue "Rock of Gibraltar" Stands (Analysis of IBM's first quarter business results)
Wall Street's New "Rock of Gibraltar" (Annual update to our 5-yr IBM forecast)
HP: Ghost of EDS Haunts HP (Analysis of HP's first quarter 2011 business results)
Case Makes a Case for Innovation (Analysis of new "Startup America" program)
HP: New Broom Sweeps Clean (Apotheker fills our first prescription in board shake-up)
IBM: Another Phoenix of the IT Industry , Analysis of IBM's 4Q10 result
One Man's Pain, Another Man's Gain? (Analysis of possible impact of Steve Jobs' health on IBM, Intel, other IT companies)
Consumer Rules (Analysis of top 15 global IT leaders' stock and business performances)
IBM Hardware to Rise and Shine Again (Analysis of IBM STG business results and outlook)
BARRON's: IBM Shareholders Will Like New Year (Analysis of Barron's article on IBM stock)
HP's "Stealth CEO" Sounds Bullish in First Public Appearance (Analysis of HP's fourth quarter business results)
Silicon Valley Rodeo (Editorial on shenanigans and costly trivial pursuits)
IBM Business Up, Stock Down (Analysis of Big Blue's third quarter business results)