Thursday, November 1, 2012

HP Printing Announcement and New Intra-Day Low

HP hit an intra-day low of $13.80 on Wednesday, but it did announce a new range of multi-function printers for government and commercial users.  Meg Whitman's comment about their not having refreshed their multi-function printer offering for seven years appeared in the press release, but it was the same comment that Dave Donatelli made during the analyst day discussions, so it was not new information.

The new multi-function printers incorporate features like direct document management to the cloud and tagging of documents using Autonomy's IDOL system, which was also demoed during analyst day.  Adding functionality from Autonomy is certainly encouraging.

Looking on the consumer side, however, their multi-function offering looks like it should all be on close-out.  The machines have been around forever, and they seem to have very large footprints and profiles for a small, home office or small business. There are too many models, and the pricing is confusing.

What's at the root of not refreshing the MF printer lines for seven years?  It's the "cash cow" seduction.  Everything HP did, including the pricing of consumables, was to generate the bulk of operating earnings and large cash flows, taking advantage of the brand name in large government and business accounts.While executive management in the printing business probably exceeded incentive comp thresholds, it wasn't a good strategy for the business to sustain itself.

We've heard good things about the internal bureaucracy busting, cultural changes being initiated by CEO Whitman.  This is akin to taking down a fifty foot oak with a tomahawk.  The new CEO needs lots of help from her executive team, middle management, and her board.  Let's hope it continues.

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