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Top 10 Reactions to HP's Crazy Restructuring

Top 10 Reactions to HP AnnouncementOccasionally, I like to write about what I actually do for a living. In case you've ever wondered, that's to second-guess the strategies and decision-making of hard-working senior executives, more or less.

What gives me a license to do that? Nothing, really. In fact, they don't usually take it very well, and I suspect it's no different when I do it publicly. At least then we're not in the same room so it's a little less uncomfortable.

Well, last Friday I decided to go out on a limb and present what I thought was a contrarian view of HP CEO Leo Apotheker's restructuring announcement that took everyone by surprise. Okay, so maybe it was a little ballsy to second-guess the CEO and board of the biggest technology company in the world.

What can I say, I thought the way HP was going about shutting down its tablet and smartphone businesses and selling or spinning-off its PC unit was, well, dumb. And I thought I had at least two very good reasons for thinking that:

Top 10 Reactions to HPs Crazy Restructuring

  1. Killing HP's iPad-killer - TouchPad - less than two months after launching it just reeks of flaky management - even panic - while essentially hanging every WebOS and TouchPad customer, developer, and service provider out to dry.
  2. Broadcasting at least a year in advance its intent to "seek strategic alternatives" for its $41 billion personal system group, a move that will surely devastate its market share, business, talent, and of course, its market value.
All that made sense to me, but the one thing I didn't expect was that the smart money agreed: HP's stock plummeted 20 percent amidst at least six analyst downgrades and some really expressive comments - to put it mildly - by said analysts and other industry observers. Here are 10 of my favorite:
  • "If HP spins off their PC business, maybe they will call it Compaq?" - Michael Dell, CEO of Dell
  • "People can say what they want about Mark Hurd. One thing for sure. He was a fighter and believed in keeping it together." - Rahul Sood, Microsoft GM and founder of VoodooPC - sold to HP in '06
  • "If the weak fiscal outlook for the year weren't enough, analysts are not happy with the prospects of HP continuing to try and sell PCs over a year-long period in which it explores strategic options, essentially making the unit a lame-duck in the market." - Tiernan Ray, Barron's
  • 'The transformation is going to be like juggling in a wind tunnel." - Chris Whitmore, analyst, Deutsche Bank
  • "It wasn't until dinner this past Sunday night that CEO Leo Apotheker told Todd Bradley, the head of its Personal Systems Group, that he was about to push key parts of Bradley's huge unit off the cliff." - Kara Swisher, All Things D
  • "We believe that HP's decision to publicly announce that it is exploring strategic options for the PC business risks is questionable, given that it could undermine the business going forward. We can't help thinking that HP may have decided to reveal [this] principally to mollify investors ... " - Toni Sacconaghi, analyst, Sanford Bernstein
  • "It is a script that could have just as easily arrived from Hollywood than Palo Alto ... HP may have eroded what remained of Wall Street's confidence in the company and its strategy ... This transformation [is] likely to involve material layoffs and the risk of significant share loss and talent drain over the next 12-24 months." - Richard Kugele, analyst, Needham & Co.
  • "Even if it makes sense in the long term, HP should not have told the world it was thinking of getting rid of its PC business ... Why would anybody want to do business with them if it's up for sale?" - Sterne Agee analyst Shaw Wu
  • "Imagine the poor IT pro who liked the technology, trusted HP, and bought some TouchPads for his company. Or the programmer who spent time learning the development system. Or the investor who thought HP might be onto something with its end-to-end story ... who instead saw the grand plan scrapped after a month in the marketplace." - Art Wittmann, Information Week
  • "All of this drastic change begs the question whether Leo Apotheker is a genius or a madman." - Anders Bylund, Ars Technica
Lastly, this priceless QOTD that John Paczkowski of All Things D pulled out of the archives in honor of the occasion: "In the tablet world, we're going to become better than number one. We call it number one plus." - Eric Cador, senior VP of HP's Personal Systems Group, May 23, 2011
Let's see, do I have anything to add to all that? Well, I was also pretty expressive in Friday's post, but I think Oracle chief Larry Ellison hit the nail on the head when he shared his view of HP's board and its choice of Apotheker as CEO in an email to the Wall Street Journal:
"HP had several good internal candidates...but instead they pick a guy who was recently fired because he did such a bad job of running SAP. The HP board needs to resign en masse ... right away. The madness must stop."
Ellison also said he was "speechless," although I doubt that's ever been true. Anyway, I happen to share Ellison's view of H-P's board, which I think is chronically dysfunctional. Furthermore, I think Thursday's announcement demonstrates that Apotheker really doesn't seem to know what the heck he's doing. I'm thinking SAP's board reached the same conclusion just before they dumped him.

And just to reaffirm that, guess what I just saw on TV? Yup, HP is still running their TouchPad ads. Really.

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