|Printers are down|
There is no shortage of complaints around HP printers, either. Between their failures in leadership and refusal to focus on customer service, the complaints abound, screaming caveat emptor to potential buyers and investors.
The HP Sucks Facebook Page is just one venue.
Servers: Lenovo will successfully attack HP's server business, just as they did the PC business. Lenovo is poised to take advantage of HP's lack of leadership and vision and make HP's server business obsolete.
Services: Services provides $1.5B in operating profit; margins were 10% in 2010 down to 3% in 2013. Services should be a strength of the company, but instead it is part of the slow drip bleeding the company to death.
|Meg Whitman - What Happened?|
PC's: A declining and losing share. Even if the PC category stabilizes, it is a small part of HP profits.
Overall, the estimated worldwide market share estimates are not impressive, especially when compared to previous numbers. New CEO's are supposed to drive their company to the top, yet Whitman and the current board have not managed to surpass the achievements made during Mark Hurd's control. In fact, they are barely hanging on.
Acquisitions: There have been $15B in acquisitions. This has translated into zero new revenues.
Acquisitions like that of Autonomy got HP nothing in new software revenue. As a matter of fact, just today Autonomy's Mike Lynch openly accused Meg Whitman of intentionally misleading shareholders.
HP bought back $20B of its stock at an average price of $34. Ouch.
My opinion? HP can't afford to make meaningful acquisitions that would be accretive to the business. We estimate that $3B is needed just to cover dividends and buybacks. With CapEx at 2.5 and taxes creeping over 20%, there isn't much left. Once below $100B, their profit will approach 8%.
If no change is in the wings for HP, it's simply not sustainable.