U.S. stocks review: HP on the road to self-destruction

Guide: MarketWatch columnist Pleti (Therese Poletti) writes that HP intends to split the PC sector and transform its software business, but that is likely to be wishful thinking, as there is a huge contradiction between HP's status, tradition and capabilities.　　, HP is probably on the road to self-destruction. The following is Pleti's commentary: Now, HP's chief executive, Leo Apotheker, has been on the road to try to appease or anger or panic investors, and the task is not easy – why he and the board are planning to split some of the company's most important assets,　　He must make a convincing explanation. Since Mr Apotheker's inauguration last November 1, Hewlett-Packard (HPQ) has lost about $36 billion trillion in its market capitalisation, and its share price has fallen by more than 40% per cent, which has left many investors on pins and needles.　　Needless to say, this is not all about HP's fault, the market's recent frenzied fluctuations and huge selling pressure also played a big role, but, after all, the standard and poor 500 index of the same period of decline only 5%. The decision announced by Hewlett-Packard in Thursday was a stone-stirring wave: Is it right? This is a problem that no one is fully aware of right now. Of course, there are a lot of other question marks that linger. Hewlett-Packard said they were looking for possible options for their PC business units, a euphemism for the fact that they wanted to split the business.　　The company also shot directly at Touchpad tablets and smartphone products, which they bought for Palm only last year. It is clear that HP has now focused its attention on the software business. Their chairman, Ray Lane, the former CEO of ORCL, and Mr Apotheker, chief executive, are backgrounds in the software industry, as did Marc Andreessen, a heavyweight on the board, who wrote in the Wall Street Journal this weekend that he believes "　　Software companies are ready to reap the huge rewards of the economy. However, in any case, the company's hopes of splitting a 40 billion-dollar PC business are fraught with huge risks. Bernstein Research Analyst Sacconaghi (Toni Sacconaghi) said in a Monday study that if HP decides to split the sector directly into shareholders, as in Agilent Technologies Inc (A),　　They will lose the power of purchasing servers, computers and printer components in the past. "We believe that this is likely to lead to negative synergies (job duplication, especially the need to build new corporate hubs, depress the purchasing power of the supply chain, and weaken distribution channels)," Sacconaghi writes. "This split would actually depress the total earnings of two companies by 5%.""In an interview with the FT," said Apotheker, "HP will recover 40 billion of billions of dollars in the PC business by" higher margins and better growth. " Losing purchasing power, however, means that other business units that they want to save will be affected, including industry-standard servers and blade servers, and parts of these products are very similar to PCs. INTC, a PC company like Dell, or a chip company like Intel, is able to maintain relatively good profit margins in the case of weak PC demand, relying on these higher-margin server products.　　HP's profit margin has benefited from its purchasing power and leading position.　　If HP wanted to emulate rival IBM's strategy, Sacconaghi wrote, it would have to accept a lower growth rate as a large technology company and return cash to shareholders through a stock buyback program. "We believe that Hewlett-Packard's financial model should be similar to IBM's: Lower earnings growth, better profit margins through cost control and transition to High-value-added business, and disciplined capital allocation to return cash to shareholders, the preferred means of stock repurchase." "In a Thursday seminar, Apotheker explained to analysts that their 10.2 billion dollar acquisition of autonomy will achieve" seamless docking, "he also boasted of his expertise as a software industry manager. "As a manager who spends most of his career in the software industry, I'm familiar with the world," he said. "Some deals are very troublesome, but the world of autonomy into HP will be seamless and highly matched," says Apotheker. "It's just that software has never been an HP's forte, and their efforts to drive this growth have started in the Fiorina (Carly Fiorina) era, but the results are negligible."　　In the 2010 fiscal year, Hewlett-Packard's software business grew to $3.58 billion trillion, not 3% of the company's total revenue over the same period, but its operating margin did reach more than 20% per cent, far exceeding 5% of the PC business.　　Apotheker is certainly not the first CEO to chase high profit margins in corporate history, but he has to make it clear whether companies will be able to survive the chase. "It takes years of effort to build a great business. "Stephen Diamond, associate professor of law at Santa Clara University, represents the thinking of many in Wall Street and Silicon Valley," but it will be enough in a few months to destroy it. "(Yuxiang) This article for the translator authorized Sina Finance exclusive use, any media cannot reprint without authorization." If you need authorization must be through Sina Finance and the author of the contact and obtain written approval. If reproduced in this article, the Translator reserves the right to prosecute, until the legal responsibility of the person who reprinted.