Musings On Markets

In my post on corporate and business breakups, I viewed the value and price effects of breakups. HP: From a bad past to a much better future? The last decade is not a good one for Hewlett Packard. Through the period, the business has not only seen its primary businesses (computer systems, printers, business services) come under assault but it has also had self-inflicted wounds from corporate and business governance failures and terrible acquisitions. I posted on one of these failed acquisitions (Autonomy) a while back and you can browse the post here.

Meg Whitman, who made her reputation because they build up EBay, in September 2011 joined the plank of directors at Horsepower in 2011 and became CEO, with the promise that she’d turn the business around. Ironically, she was instrumental in rejecting a youthful plan to break up the company, arguing that the business was “better together”.

  • Contract Package Number: PKG#########
  • Higher education
  • The business may lose large orders if not able to fulfill demand
  • Be careful to use the correct cleaning products on the right surfaces
  • Become a Leader
  • Based on the pay value, create an affirmation to support you in achieving this goal
  • 2011: -3.6% 2.1%

In the last 3 years, Whitman has toiled with blended results on both the profitability and the stock price front. The net loss in 2012 shown the write off of their ill-fated Autonomy acquisition. You may get HP’s latest annual record, 10Q and 10K, and an overview of the company’s financials over time. In early October, HP announced that it was planning to break itself up into two companies, one comprising the computer and printing device businesses and the other incorporating business services and its own financial arm. The state announcement (or at least presentation) that HP made about the break up is here now.

2.8 billion. The footnote suggests that this will not include corporate opportunities (I suppose that this refers to unallocated corporate and business costs) and seems to leave the impression, intended or not, that these costs will disappear after the break up. In my post on valuing the effect of a rest up, I argued that there have been two questions that needed to be answered. The foremost is an evaluation of the effects of the split up on cash moves, growth, and risk and the causing effect on value. 31.85 billion higher than the consolidated company.

2.8 billion higher than the consolidated company’s income. 2.8 billion will really be cut and exactly how much is a mirage that will manifest at the new HP pieces. To calculate the effect, I considered different estimations of the cost-cost savings and the effect on value. You can check for yourself, by installing the spreadsheet that I used and tweaking or changing the real quantities that you think I acquired incorrect.

Bad management: It is completely possible that the existing management at HP was aware of its bloated cost framework and chose to do nothing at all (or hardly any) about it. The problem with this rationale would be that the broken-up devices will be run by the same management (Meg Whitman and Dion Weisler) that run the consolidated company. Culture: It’s possible that Meg and Dion wished to spend less but that they were unable to do this because of the HP culture (which includes historically centered on growth and creativity).