4. Meg's Marty McFly Moment -- Originally published on March 23, 2012
Honestly, we don't know if Hewlett-Packard's move this week to merge its PC and printer divisions is dumb. Clearly the company needs to slash costs as its revenue -- especially its hardware sales -- continues to shrink. And for all we know right now, this could be Meg Whitman's first real managerial masterstroke in her quest to turn this once-proud tech titan around.
For the record, the printing and PC units together made up about half of HP's $30 billion revenue in its fiscal first quarter. Revenue from the printing division was down 13% in 2011 to $25.8 billion from a high of $29.6 billion in fiscal 2008, while sales in the PC division have dropped 6.4% over the same period to $39.6 billion in 2011.
That said, while we can't assess how dumb Meg's reorganization plan is at this point in time, we guarantee you this Dumbest fans: It will be dumb at some point.Maybe next month or maybe next year. Or we may even have to wait ten years to revisit Meg's maneuver. But mark our words folks, there will come a moment when an HP restructuring will be Dumbest-worthy, so we might as well get it over with now. How do we know this? Why are we so certain? Well, let's rev the Dumbest DeLorean up to 88 miles per hour and go back to the future, shall we? In September 2001, in what former HP CEO Carly Fiorina calls a "decisive move" to provide "significant cost structure improvements," the company purchases Compaq Computer for $25 billion and merges it with its printer division. HP sales double over the next five years, however, 80% of the company's business remains printer-related and the company's board never forgives Carly for the deal. Fast forward to February 2005: Carly gets canned, complete with a $42 million exit package. Enter new CEO Mark Hurd, who splits the printer and PC businesses into separate divisions in order to lessen the company's dependency on printer-related items. He also lessens the number of employees at the company, slashing headcount at its once-vaunted R&D operation. Fast forward to August 2010: Hurd gets canned, complete with a $34 million exit package. Enter new CEO Leo Apotheker, who tries to get rid of the entire PC business through a sale or spin-off. Everybody thinks Leo is just plain loony. Fast forward a mere 11 months to September 2011: Apotheker gets canned before anybody even learns to pronounce his last name, complete with a $25 million exit package. Enter former eBay chief Meg Whitman as CEO and fast forward to this past Wednesday. "This combination will bring together two businesses where HP has established global leadership," said Whitman in a statement about the new road HP intends to take. Or should we say old road since this is simply a return to the Carly days? Then again, to paraphrase Back to the Future's Doc Brown, where they're going, they don't need roads. Think about it. Who needs roads when you repeatedly throw your entire business up in the air and your CEO out the door?