PC makers in need of a reboot
Posted: Tuesday, September 11, 2012 7:00 pm
By: MICHAEL LIEDTKE AP Technology Writer
By MICHAEL LIEDTKE
AP Technology Writer
SAN FRANCISCO (AP) — Hewlett-Packard Co. used to be known as a place where innovative thinkers flocked to work on great ideas that opened new frontiers in technology.
These days, HP is looking behind the times.
Coming off a five-year stretch of miscalculations, HP is in such desperate need of a reboot that many investors have written off its chances of a comeback.
Consider this: Since Apple Inc. shifted the direction of computing with the release of the iPhone in June 2007, HP’s market value has plunged by 60 percent to $35 billion. During that time, HP has spent more than $40 billion on dozens of acquisitions that have largely turned out to be duds so far.
“Just think of all the value that they have destroyed,” ISI analyst Brian Marshall said. “It has been a case of just horrible management.”
Marshall traces the bungling to the reign of Carly Fiorina, who pushed through an acquisition of Compaq Computer a decade ago despite staunch resistance from many shareholders, including the heirs of HP’s co-founders. After HP ousted Fiorina in 2005, other questionable deals and investments were made by two subsequent CEOS, Mark Hurd and Leo Apotheker.
HP hired Meg Whitman 11 months ago in the latest effort to salvage what remains of one of the most hallowed names in Silicon Valley 73 years after its start in a Palo Alto, Calif., garage.
The latest reminder of HP’s ineptitude came when the company recently reported an $8.9 billion quarterly loss, the largest in the company’s history.
HP might have been unchallenged for the ignominious title as technology’s most troubled company if not for one its biggest rivals, Dell Inc.
Like HP, Dell missed the trends that have turned selling PCs into one of technology’s least profitable and slowest growing niches. As a result, Dell’s market value has also plummeted by 60 percent, to about $20 billion, since the iPhone’s release.
That means the combined market value of HP and Dell — the two largest PC makers in the U.S. — is less than the $63 billion in revenue Apple got from iPhones and various accessories during just the past nine months.
The handheld, touch-based computing revolution unleashed by the iPhone and Apple’s 2010 introduction of the iPad isn’t the only challenge facing HP and Dell.
They are also scrambling to catch up in two other rapidly growing fields — “cloud computing” and “Big Data.”