The market had quite an ugly day on Thursday. But for a brief moment,
Hewlett-Packard (NYSE: HPQ ) swam dramatically against the down-current on news
it is considering a massive $10 billion buyout of software firm Autonomy, among
a host of other reports swirling around the stock that day. HPQ stock gapped up
about 6% at lunch time yesterday even as the Dow Jones bounced along about 400
points below the index's reading at the opening bell. Of course, the gains
were fleeting and Hewlett-Packard stock finished the day down, along with nearly
every other stock on Wall Street. Some investors were fooled for about an hour
– and then the profits evaporated. Yesterday's performance is a fitting
example of how short-lived any rays of hope are HP these days amid the frenetic
pace of company developments. The 10-figure buyouts. The claims that it is
rethinking its role in the tech sector. The blatant flaunting of its massive
cash stockpile at a time when companies claim to be suffering from the economic
downturn. Hewlett-Packard is everything that's wrong with corporate America
right now stupidity, a lack of innovation, bloated operations and no
leadership. Stupidity Lots of people thought that Hewlett-Packard was batty when
it bought Palm in 2010. At the time, the company didn't bother to hedge its
bets but instead engaged in the typical hyperbole of a big-name buyout. Check
out this gem from the an official press release on HP.com: "Palm's
innovative operating system provides an ideal platform to expand HP's mobility
strategy and create a unique HP experience spanning multiple mobile connected
devices," said Todd Bradley, executive vice president, Personal Systems Group,
HP. Oh yeah? Well what about the news yesterday that Hewlett-Packard will be
abandoning any effort to capitalize on the mobile market by killing its tablet
computer and mobile phone business based on WebOS – the very gadgets Palm was
supposed to inspire? Only can a wasteful, boneheaded corporation like HP make a
$1.2 billion purchase during a recession and then give up on that buy a mere 16
months later. The icing on the cake: Just this past February, HP made a big
to-do about its plan to duke it out with the iPad – and just months after
smack-talking, had to eat its words. Lack of Innovation Unfortunately, the $1.
billion for Palm is just part of a spending spree fueled by HP executives with
too much money and a desire to spend it without thinking. In November 2009 , the
tech giant paid $2.7 billion for routing and digital security stock 3com. Then
in September 2010 , Hewlett-Packard engaged in a spitting match with Dell
(NASDAQ: DELL ) to buy out data storage and cloud computing stock 3Par – with
HP paying $2.35 billion for its "winning" bid of $33 a share, over 83%
higher than Dell's opening bid of $18 a share. Now we have news that the
company could be buying British software stock Autonomy for $10 billion,
according to reports confirmed by major news sources Thursday. We've already
had HP essentially admit the Palm move was a disaster. But even if we take a
huge leap of faith and assume those other moves pay off, HP is building its
future profits on the work of other companies and the efficiencies it can gain
from streamlining operations to maximize margins and profits. That's fine if
you're a CEO or executive at the top of the food chain. Not so good if
you're part of the 25,000 workers trimmed in the wake of the 2008 acquisition
of Electronic Data Systems for $13.6 billion. Or the 9,000 HP employees let go
in 2010, or the thousands of folks who will undoubtedly be terminated as this
tech giant "consolidates" operations in the years ahead due to these bloated
buyout deals.
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