HP Doesn’t Get It

Hewlett-Packard appears to be through as a PC maker. Their TouchPad (HP’s version of the iPad), introduced only six weeks ago, was recently discounted– and now it’s discontinued. Today, at HP’s quarterly earnings conference call, HP said that it was “exploring options” for getting out of the PC business altogether. Wow.

There’s a lot of other HP news, though none of it as shocking as HP’s ability to face the fact that an HP logo on a not-as-good-as-the-iPad tablet isn’t nearly good enough. The thing that really stands out, though, is what HP’s CEO and CFO say is the driving force for the company: namely, creating and increasing “shareholder value.”

You never hear Apple talking about “shareholder value” in its conference calls. All Apple talks about is making great products– and about record sales. I don’t think it’s a coincidence.

If you make it plain that your Number One priority is “increasing shareholder value” you also make it plain that “making great stuff” can’t be higher than priority Number Two. To my mind, HP has it backward. Make great stuff first. “Shareholder value” will come along for the ride.

In case anyone from HP is reading… imagine the man on the street talking about your products even when the products haven’t been announced. Imagine world-wide news coverage of your every product introduction. Imagine repeat customers desiring your products so strongly that they camp on the sidewalks outside your stores for the privilege of exchanging their money for your goods. If you’re HP, you can only imagine. But if you’re Apple, you know what it’s like first-hand.

Maybe one day HP will realize that they got where they are (actually, where they used to be) by making great stuff, and maybe one day they’ll focus on that instead of on shareholder value. I hope they do. But I wouldn’t bet on it.

Here are some excerpts from HP’s conference call (with emphasis added by me). You can read a transcript of the entire event here. You can search the transcript for the word “shareholder” and find it many times, including in the snippets below:

Léo Apotheker, HP’s CEO: “Today is all about rising shareholder values and addressing the challenges we face in our business.”

Mr. Apotheker: “… continuing to execute our current device approach in this market space [tablets] is no longer in the best interest of HP and HP’s shareholders. Therefore, we have made the difficult but necessary decision to shut down the webOS hardware provisions within Q4 2011.”

Mr. Apotheker: “… most importantly, we very strongly believe the transaction [purchasing Autonomy] will create significant value for our shareholders.

Mr. Apotheker: “…as CEO, I believe in transparency about what we are facing and be clear on the decisive things we are doing now about it. To conclude, I’m taking ownership for these decisions and investments with a focus on driving actions that deliver value for shareholders as we shape the new HP.”

Catherine Lesjak, HP’s CFO: “We are repositioning our portfolio, discontinuing or exploring options for lower margin businesses and investing in higher margin areas, including Services and Software. This effort will require patience, but the clear objective is to drive long-term shareholder value.

Mr. Apotheker: “I said it before, this is about a transformation to position HP for a new future and about driving long-term shareholder value… As CEO, I’m steadfast in my commitment to take action to do the right things to drive value for our shareholders.”

Yikes.

Here’s something a little different: the transcript from Apple’s July 19th, 2011 quarterly earnings conference call. You can search it for the word “shareholder” but it’s not mentioned even once. They do mention”products” six times, and “customer” eleven. Maybe they’re on to something. Maybe.


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