Does Even HP Understand HP?

Hewlett Packard has taken us on a wild ride this last year or so. It got especially exciting late in the summer, when former CEO Leo Apotheker announced the company would be eliminating a few small parts of their operation. You know, like WebOS hardware, after spending $1.2 billion to purchase Palm and more on development. Oh, and that insignificant Personal Systems Group, the division that makes HP the world’s number one PC manufacturer. Now, after a CEO change, and completing an “evaluation of strategic alternatives” for PSG, the company’s changed its mind.

“HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees,” said Meg Whitman, HP president and chief executive officer. “HP is committed to PSG, and together we are stronger.”

Obviously, HP’s board has seen the logic in the argument that you don’t spin off your core, enormously successful business, in favor of risking entry into an entirely different industry for no better reason than higher margins if you’re successful.

All this leaves me with just one question. How does a major player like HP make a decision to spin off its most important division before checking what was the right move, at least for the shareholders? Did the decision to destroy roughly $10 billion in market capitalization come from causal boardroom conversation, rather than a detailed analysis of the company’s future?

Somewhere in my head there was this assumption that, while they may have been wrong, HP’s leadership was seeing something about the company that the rest of us were missing. Even after hiring Meg Whitman as the company’s new CEO, they were sticking to their guns, looking to spin off PSG. They obviously felt strongly about the decision that hardware was not the company’s future.

Then, just weeks later, the decision is reversed. The future of WebOS seems to be up in the air, but HP now remains the number one manufacturer of PCs, despite the colossal blow to their customer relationships this debacle has caused. The fickle nature of these decisions leads me to think the company has lost any sense of purpose or direction.

Investors need to take stock. HP shares have lost nearly 50 percent of their value since Mark Hurd was fired as CEO, and much of the damage seems to have been done in the name of an effort that was abandoned in the face of nothing more than public criticism. It’s time this game of CEO shuffling ended. Shareholders need to start looking for a whole new board, before this one makes things any worse.