HP stock crumbles to nine-year-low
Drop follows announcement of anaemic 2013 projections
Hewlett-Packard shares plummeted 13% yesterday to hit a nine-year low, following an announcement by chief executive Meg Whitman that 2013 revenues were projected to slip in every division except software, reports Reuters.
Whitman pointed to extraordinary executive turnover in recent years (she was HP's third CEO in as many years following Leo Apotheker's dismissal) as the reason for HP's struggle to keep pace with rivals such as Dell and IBM.
She said the revolving door at C-level had "caused multiple inconsistent strategic choices and frankly some significant executional miscues". She said her planned turnaround would only become apparent in 2014 when investments start to bear fruit, and would take five years to become fully effective.
"It is going to take longer to right this ship than any of us would like," she said.
HP stock has fallen by a total of 35% since Whitman took the reins in September 2011, following a failed gubernatorial campaign in California. She was confronted with a global ICT market where corporate spend was shrinking.
HP subsequently announced 29,000 layoffs would take place over a two-year term and it wrote off $10.8bn, mostly related to the writedown of its EDS services business.
"I was surprised that nothing new was really said in terms of strategy, and the problem here is there is lack of investor confidence in the current strategy," said Shaw Wu, an analyst with Sterne Agee.
The strategy Wu referred to is Whiman's plan to remake the former tech heavyweight via workforce reduction, cost-cutting, and expansion into areas with longer-term potential such as enterprise computing services.
China-based Lenovo Group Ltd is set to overtake HP as the world's largest PC vendor by the end of the year.
"Asian brands will continue to outperform western brands," said Angela Hsiang, a Taiwan-based analyst at KGI Securities. "Western brands in general are lagging their Asian peers in terms of grabbing market share in fast-growing emerging markets."
Whitman also said HP would have to enter the smartphone market eventually, but stopped short of laying out a plan and said there were no plans to introduce a smartphone in 2013.