HP’s Symbolic Dismissal
HP is not the only company that will be leaving the Dow -- the other two being Bank of America, and Alcoa -- but it is the only tech company, and the news is not going to help it build the badly needed market confidence it needs to pull itself out of the mess it is currently in.
In reality, and in practical terms, this won’t make a huge difference to HP on a day-to-day basis, but it is hugely symbolic for a company that was once considered the epitome of American innovation.
The significance of the move cannot be underestimated. This is the first major change to the blue-chip index in nearly a decade.
Inclusion on the index is always a sign of good financial health, offering a certain amount of financial prestige and weight. Conversely, to get the boot is a sign of failing confidence, and financial confidence is something HP badly needs.
HP’s Financial, Technology Performance
The move has not been prompted by a single bad financial quarter as we saw in the Q3 figures recently, but by successive poor quarters that point to the fact that despite the ongoing development of products, and the integration of Autonomy technology into the HP portfolio, Meg Whitman has not yet succeeded in dispelling the cloud hanging over the company.
That is not to say that it has not produced some interesting and potentially lucrative products, because it has. In recent months there was the new HP Records Manager 8.0, which is just off the production line and is still building up steam.
Only last month it was pushing ‘ECM without Borders’ with the release of LinkSite for File Sharing, a product that should raise considerable interest as it offers governance and security around the increasingly common practice of file sharing.
It has also increased the pace of layoffs with 27,700 people already axed from its workforce out of a planned cut of 29,000 according to a SEC filing on Monday as it tries to make savings of US$ 3 billion.
HP Moving Froward
The same SEC filing confirmed that HP is being investigated by the Polish Central Anti-Corruption Bureau and other US agencies under the US Foreign Corrupt Practices Act. This is on top of the investigations already being carried out by the Department of Justice and the SEC into other public sector transactions in a number of other countries.
If HP isn’t in a mess, then it is certainly doing a very good impression of it, and yet Meg Whitman recently announced that she would be looking at more acquisitions to fill out holes in its technology portfolio, albeit acquisitions under the US$ 1.5 threshold.
With that announcement, we suggested that she should be looking at clarifying future strategy rather than buying more technologies that will have to be incorporated into the portfolio. Perhaps being kicked from the Dow will help HP focus on this.
Image courtesy of Sai Yeung Chan (Shutterstock)