It has only been a few short week since Meg Whitman took over as CEO of Hewlett Packard (HPQ) and things are already starting to look up. HP has scrapped the plan to abandon one of its core businesses since dumping its previous CEO. In the short time that Whitman has been at HP she has helped to reestablish investor confidence in the company. Whitman may not have been my choice for CEO of the technology giant but she is far better than the previous CEO.
HP’s New Business Strategy
Whitman has decided that HP will no longer sell off its PC business. Former CEO Leo Apotheker was trying to sell the PC business or spin it off before he was shown the door last month. Whitman initially said that she would uphold the direction that Apotheker set for the company. However after a review of the company’s business units she decided to hold onto the PC business.
I think that Whitman made a wise choice. One of the reasons for the sell off in HP over the past year is the fact that investors had no confidence in the management team. Hewlett Packard seemed to be changing its business strategy every single quarter. Apotheker was even giving up on the company’s tablet PC’s after a few month.The company had no direction and appeared rudderless.
Whitman is not giving up on the tablet PC market and has plans to compete against Apple for market share. HP is going to hold onto its operating system and maintain its status as the number one seller of personal computers in the world.
I have more confidence in the company’s direction today than I did just a few short months ago. Getting rid of a $40 billion dollar a year business overnight seemed like a bad decision. The company can continue to increase its investments in software and cloud computing while still generating profits from its personal computers divisions.
With a stock price of $26 per share, a ton of cash on the balance sheet, and a competent CEO onboard Hewlett Packard is a reasonable buy. I would not have thought this just two months ago.