The sharks are circling Hewlett-Packard. Last week's stunning twin announcements that it is giving up on WebOS devices and may spin off its PC unit have left buckets of blood in the water. If something radical doesn't happen soon, a one-time gem of Silicon Valley could wind up in someone's belly. Thousands of employees, not to mention shareholders, will be the victims. Customers -- I'm talking to you, readers -- likely won't fare well either.
There's already talk on Wall Street that HP's valuation has plunged so much in the last week -- 20 percent, or about $10 billion (that's billion with a "b") -- that it could become a tasty morsel for a takeover artist or be sold off piece by piece.
Don't believe me? Listen to a man who helps manage a $9.5 billion fund that holds shares of HP. "For the right company, it probably would make sense for someone to come in and scoop it up. Someone could come and at least buy pieces of the firm," Michael Mullaney of Fiduciary Trust told Bloomberg News. A company that was a crown jewel of Silicon Valley now appears to be a "rudderless ship."
Harsh? Mullaney was being nice. "Valuation? What valuation?" asked Trip Chowdhry, managing director of Global Equities. "You can only talk about valuation if management has a clue, the board has its act together, the products address customer needs, and the customers are taken care of," he told me.
Chowdhry's prescription -- one I endorse -- is radical and immediate surgery. "Fire each and every top executive, including CEO Léo Apotheker; get rid of the board, including Chairman Ray Lane; and bring in people from startups who are aggressive and hungry to win."
Three CEOs, three whopping failures
Apotheker is the third in a line of failed Hewlett Packard CEOs, so it's not fair to blame him for all of the company's troubles. After all, the PC unit he wants to spin off is only as large as it is because former CEO Carly Fiorina broke the bank buying Compaq, one of the worst mega-acquisitions every made by a technology company.
Then there was Mark Hurd, Fiorina's replacement and Apotheker's predecessor. Sure, he was fired ostensibly because he couldn't keep his pants on and fudged an expense report to keep it secret. But his real sin was that his basic management strategy was only to fire people and trim expenses. That works for a while because it boosts short-term earnings, but as a long-term strategy for growth it's a total bust.