The Continuing Soap Opera @ HP

http://www.nytimes.com/reuters/2013/04/04/business/04reuters-hp-chairman.html?ref=business

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"Advice is seldom welcome, and those who need it most like it the least." (Samuel Johnson)

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Perhaps our "saying" applies to Ray Lane who is giving up his title as Chairman of the Board at HP. Among other things, Lane has come under fire for his role in the "botched," costly acquisition of British software company Autonomy Plc. Lane will remain on HP's board.

Today's announcement comes weeks after Lane, Kleiner Perkins managing partner, narrowly won reelection at HP's annual shareholder's meeting.

According to the NY Times, director and activist Ralph Whitworth will become interim chairman.

Under the "Wait, There's More" category heading, HP says that it is looking for a "non-executive board chairman" to replace Lane. For anyone with any experience at this level, what that means is that Whitworth is looking for a chairperson with no teeth who will be happy to "preside" at board meetings without any real responsibilities. Anybody qualified for that job is not qualified. So they'd fit right in.

But wait, there's more. The position of "lead independent director" is being eliminated. Since Rajiv Gupta was that person, I'm sure he's relieved to find out that he is still on the board and is now chairman of the audit committee.

So what has "The Gang That Couldn't Shoot Straight" accomplished over the past few years? After 3 years of booking net income of between $7 billion and $9 billion, HP suffered an annual loss of $12.65 billion in 2012. The "loss" was caused by the incurring of after tax costs of $20.7 billion, or $10.46 per diluted share, related to the impairment of goodwill and purchased intangible assets, restructuring charges, amortization of purchased intangible assets, charges relating to the wind down of non-strategic businesses, and acquisition-related charges. This is what you say in accounting language when you paid $8 billion too much for "Autonomy."

The problems go back before last year. In the last two years, HP has written off more than $17 billion to account for three acquisitions that didn't turn out so well: technology consulting service EDS, device maker Palm and business software maker Autonomy.

In addition to the recent write-downs, HP has also had to overcome a continuing decline in personal computer sales. Half of HP's revenue comes from two divisions: personal computers and printers. Both are in a long term decline. That's why HP has been trying to change from a hardware company to a software and services company over several years. Poor choices and top management turnover have literally caused them to fail. Plus, they face stiff competition from three companies that already occupy the market space that HP has aspired to: IBM, Oracle and SAP.

Meg Whitman, HP's CEO, recently stated that the new restructuring strategy will pay off in 2014. So, I guess that leaves this year out.

Is it possible to take a great company and mess it up any worse than this?