Apotheker era off to inauspicious start at HP

HP shares hammered over low Q1 PC sales, disappointing forecast

REUTERS/Mal Langsdon

HP CEO Leo Apotheker

What began as a promising year for shareholders of Hewlett-Packard (NYSE: HPQ) quickly unraveled after Tuesday's market close, when the company reported disappointing fiscal first-quarter PC sales and an equally disappointing revenue forecast for the rest of the year. By early afternoon Wednesday, shares of HP were down 4.99, or 10.35, to 43.24, from Tuesday's closing price of 48.23. HP shares entered 2011 at 42.10, so the negative reaction to the company's Q1 results and yearly forecast wiped out most of the year's gains. (Also see: Is Leo Apotheker on the lam?) Some analysts are calling the double-digit drop in share price a buying opportunity, while others argue that "people are suspending their verdicts" about the company's direction until an event in March at which new CEO Leo Apotheker promises to unveil a new strategic plan for HP. I'm with the "suspended verdict" crowd. HP strikes me as a fairly rudderless ship right now, and I'm not confident Apotheker is the guy to lead the company into the mobile and cloud computing eras. Part of this has to do with his mediocre performance as CEO of German software giant SAP AG, where he lasted in the top slot for less than a year before departing in February 2010. Then there was the weird thing where Apotheker started his new job as chief executive of HP last November by staying away from company headquarters so he wouldn't be served with a subpoena in the trial to determine how much SAP owed rival Oracle for stealing intellectual property, a theft that happened on Apotheker's watch. The idea of a new CEO hiding from the home office under the pathetic guise of a "worldwide listening tour" was undignified and -- just my opinion -- humiliating. Following the earnings release, Apotheker tried to dismiss HP's poor PC sales, telling the Wall Street Journal that the drop in consumer PC sales during the holiday quarter "is not an H-P issue, that's a market issue." Yes, but, as the world's top seller of PCs, with nearly 18 percent market share, it sort of is an HP issue. Even the reticence to talk strategy before the big March event strikes an odd chord. HP's stock just got hammered, investors are worried, and Apotheker tells everyone to cool their jets until next month? It's fair to wonder if, after more than three months at the helm, Apotheker actually has a strategy for his company. HP has had a hard time of it over the past few years. The Carly Fiorina era was a disaster. Then there was the pretexting scandal in 2006. The Mark Hurd era was marked by cost-cutting and, no doubt, fear and low morale until Hurd himself resigned last August under a cloud of alleged sexual harassment and expense-account irregularities. And now there's Apotheker, whose first full quarterly results as CEO and disappointing forecast dropped HP shares by more than 10 percent. Anyone who sees this scenario as a buying opportunity aren't suspending their verdicts, they're suspending their judgment.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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