HP shows signs of improvement

Can new CEO Meg Whitman turn the ship around? So far, she seems to be making the right moves.

By Kim Peterson Feb 20, 2012 2:35PM
Image: CEO (© Photodisc/Getty Images)Meg Whitman took the reins at Hewlett-Packard (HPQ) just in September, so it's too early to make any call on her leadership yet.

Still, shareholders are watching to see if she can pull the computing giant out of its spiral. So far, I like what she's doing.

One of the first moves Whitman made was to announce that the company would continue to sell personal computers. Just one month before she was made CEO, the company announced it was looking at selling or spinning off its PC business.

That move shocked the industry and Wall Street. The PC business was one of HP's biggest assets, and its future ground to a halt the minute executives announced they wanted to explore options. Vendors and other partners didn't want to make any deals until they knew where the division was headed.

But Whitman reversed that decision weeks after she was hired. The PC business is too big and too important to HP to dump, and she needed to calm the waters before doing anything else.

Is HP stock a buy right now? Check out the following video for analysts' impressions.

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Barron's mentions
some smaller moves Whitman has made that speak to her promising management skills. She's at least talking more to employees, which is something her predecessors weren't too skilled at.

"She has spent a fair amount of time talking to people, she's approachable," says one former executive, Phil McKinney, according to Barron's. "The previous chiefs didn't even know where the HP cafeteria was."

Whitman also moved senior executives from their enclosed offices into cubicles. Those execs undoubtedly groaned at the move, but it puts them into the trenches a little more and helps more conversations take place.

Whitman has also made a commitment to increasing spending on research and development. HP's spending in this area has dwindled to a mere 2.6% of revenue, Barron's reports, while some of the biggest success stories in the business are spending far more.

We don't know how much Whitman will increase the R&D spend to, but the fact that she acknowledges the deficiency is another good sign.

Shareholders seem to have found new optimism in the stock. Shares have risen 30% since Whitman was named CEO. That's a nice change; in the year before she was hired, shares fell more than 40%.

I thought Whitman was a great hire, and wrote about it here. But it's too early to know if she can truly turn the ship around. Things were so bad after the reign of Léo Apotheker that she's all but guaranteed some measure of success. If Whitman can restore HP to its former level of greatness, that would be a miracle.

Kim Peterson doesn't own any shares of HP.
Tags: HPQ


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