This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Hewlett Packard's Whitman May Write Off Transformation

In Wednesday's earnings call, Whitman nevertheless stuck to her strategy and noted that HP has put in place methods to improve Autonomy's sales force and pipeline, while further integrating it with HP's services processes.

Meanwhile, the company saw improvements in Autonomy's cloud-based data service LiveVault. Still, Whitman told investors that the unit's turnaround will take time. "Overall, we have a very long way to go but we are taking steps to fix the problems and help Autonomy succeed," she said.

A year into HP's turnaround push, earnings confirm a transformation will not come quickly, and doubters mount. Shares are off roughly 30% in the past year, underperforming Dell's 20%-plus losses. IT services giants IBM and Accenture are up over 20% over that time, underscoring the imperative of a services and software transition.

Were HP to decide "a very long way to go" in the turnaround effort is more likely to be never, the company may yet need to consider former CEO Apotheker's strategy to spin off the company's PC and printer assets.

Earlier in August, UBS analyst Steven Milunovich said HP has so far assembled a mediocre set of assets that's unlikely to pull business from entrenched enterprise players IBM and EMC (EMC).

"HP lacks the pure enterprise focus of IBM and EMC yet will have trouble competing for consumers without strong tablet and phone businesses like Apple and Samsung," wrote Milunovich in an Aug 8 initiation of HP shares with a sell rating and a $16 price target.

"We question whether HP is 'better together' and that it might be 'smart to be apart,' specifically spinning off printers and PCs," he added.

In a decisive first call as CEO, Whitman retained HP's PC unit -- contrary to Apotheker's plan -- and cast high expectations on the benefits of Autonomy.

HP chairman Ray Lane said in September that Autonomy's software and analytics revenue could grow from present levels of $1 billion to $5 billion or even $10 billion. "Hopefully, we'll see a bigger software portfolio and we'll see more value-added services at HP, but we have $120 billion of hardware business that we care dearly about," said Lane that September.

HP also merged its PC and printers divisions in a move to cut costs, under Whitman.

While Whitman can be lauded for her decisiveness as CEO, investors now need to see execution. It may not be time to write off HP or Whitman, but signals that an Autonomy is now on the table doesn't help to instill much confidence.

For more on tech sector M&A and turnaround efforts, see why a BMC Software (BMC) deal is caught between a cloud boom and tech gloom.

Interested in more on HP? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends.

-- Written by Antoine Gara in New York

3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,215.84 -63.90 -0.37%
S&P 500 1,997.42 -12.98 -0.65%
NASDAQ 4,531.5380 -48.2510 -1.05%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs