CEO and current chief of Hewlett-Packard
, Meg Whitman, inherited a company that was (and remains) on top of the PC pile, but also one that was struggling to find direction. She replaced Léo Apotheker, a software guy who wanted to exit HP from the PC business and focus on software and printing, a strategy that didn't mesh with the Board's vision for the future. As such, Whitman jumped into the fire feet first, was handed the reins, and essentially told, 'Here you go, fix everything.'
That's what she's been trying to do, but some things take time. While speaking to financial analysts this week, Whitman hit them with the news that earnings would take a dive, revenue was about to fall in every sector outside of software, and that a full turnaround in the company's fortunes might not come until 2016.
Investors reacted by sending shares of HP's stock down 13 percent on Wednesday, surpassing the biggest single-day decline in over a year, and devaluing the company by about $4.36 billion. Shares of HP are now trading at $14.40, the lowest they've been in 9 years, and more than 40 percent lower than what they were trading at during the beginning of the year.
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"We have much more work to do," Whitman said.
Is Whitman the right person for the job? That remains to be seen, but you have to admire her strategy. According to a report in The New York Times
, hitting investors with a mountain of bad news was part of her strategy, even knowing full well that they would likely react like this. Why? Simply put, anonymous sources tell NYT that Whitman wanted to get all the bad news out in the open at once and focus on rebuilding, rather than having to explain to investors quarter after quarter why things continue to look so grim.
Going forward, HP's biggest threat in the PC space is Lenovo, which may overtake HP for the No. 1 spot. Not only is Lenovo finding ways to weather the recession and sell PCs, it's also creating goodwill by recently announcing plans
to open a U.S.-based PC production facility, which is expected to be operational next year.