Annex Bulletin 2012-09                              November 19, 2012

A partially OPEN edition

Recent...

 

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 - Analysis of HP 1QFY12 business results, 2/22/12).

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

Bob Djurdjevic

 
Feb 22, 2012 ... Analysis of Hewlett-Packard's First Quarter FY12 Business Results. Waning of PC Era Hurts HP. PC Sales Drop 15%, Earnings Plummet 40%; ...
www.djurdjevic.com/2012/Bulletins/03HP_1Q12.html
 
Aug 7, 2010 ... Just ask Carly Fiorina, former HP CEO, now a Republican senatorial candidate in California. We are reminded of her two HP acquisition ...
www.djurdjevic.com/Bulletins2010/11HP_3Par.html
 
Feb 22, 2011 ... HAIKU, Maui, Feb 22, 2011 - It was the new HP CEO's first full quarter, the start of a new era. And it started with a bang and a roar. Not the kind ...
www.djurdjevic.com/2011/Bulletins2011/07HP_1Q.html
 
Nov 23, 2010 ... HP's 8% rise in revenue and a 5% increase in net earnings in its final quarter of fiscal 2010, both exceeding Wall Street expectations, sent the ...
djurdjevic.com/Bulletins2010/17HP_4Q.html
 
Aug 21, 2011 ... HAIKU, Maui, Aug 21, 2011 - Last week, HP got killed on Wall Street. Its shareholders lost 28% of their market value. And the stock had already ...
www.djurdjevic.com/2011/Bulletins2011/15Why_HP_Failed.html
 
Jan 20, 2011 ... HP CEO Leo Apotheker partially filled our first prescription, shaking up the schizophrenic Hewlett-Packard board. Four of HP directors were ...
djurdjevic.com/2011/Bulletins2011/05HP_Board_Google_CEO.html

 

Volume XXVIII, Annex Bulletin 2012-09
November 19, 2012

Bob Djurdjevic, Editor
e-mail: annex@djurdjevic.com

(c) Copyright 2012 by Annex Research, Inc. All rights reserved.
The copyright-protected information contained in the ANNEX BULLETINS is part of the Comprehensive Market Service (CMS).  Reproduction by any means is prohibited..

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