Hewlett-Packard (HP) CEO Meg Whitman sorely disappointed stockholders with her gloomy reports about the company’s performance and dismal future. The negative nature of the meeting with Wall Street analysts was reflected in a 13 percent dip in HP stock prices by the end of Wednesday.
The Causes of HP’s Woes
Analysts expect that HP’s 2013 revenue numbers will be up to 13 percent lower than its 2012 revenue results.
A high turnover in top executive positions has left the company scrambling to employ an effective business strategy. Each of the three CEOs who have headed the company in the past 13 years have had vastly different visions for keeping the company successful.
Whitman is attempting to improve personnel issues within the company to help drive success. Several high-level executives have been replaced in an attempt to help the company recover from its slump.
How HP Can Recover
While Whitman predicts that the company will continue to turn disappointing profits through 2016, the company is being proactive about recovery. Whitman’s business strategy involves making cuts in product lines including computers, laser printers and ink products. The strategy attempts to cut costs and allow the company to back off of outdated technologies to avoid loss of revenue due to unpopular product offerings.
The development of a connected printer that detects low ink levels and automatically orders refills for users is expected to help boost sales. However, investors interested in the future of HP are wary of the risky business plan that Whitman aims to put into action. Analysts think that Whitman’s ideas about new product innovation will ultimately be a wash, and any improvements in the financial performance of HP will likely depend on its ability to employ a successful team of executives.
Whitman has already cut over 5 percent of HP’s workforce in an attempt to significantly reduce costs by automating many of the tasks necessary for production.