Can This Tech Giant Save Shareholders?
In a bid to fight its declining personal computer sales and stay relevant in what Apple (NASDAQ:AAPL) CEO Tim Cook has dubbed the “post-PC world,” Hewlett-Packard (NYSE:HPQ) announced its plan to develop its own smartphone.
While the iPhone and iPad have been great successes for Apple, Hewlett-Packard CEO Meg Whitman has been leading the world’s leading seller of PCs down the path of IBM, focusing on enterprise service to maintain profitability. But Whitman’s stance has now changed. Not only does HP have plans to design a smartphone, the company’s more recent earnings report said a tablet is in development as well.
During an appearance on Fox Business Network, Whitman said the company will be entering the smartphone market to increase the company’s consumer base because, for so many people around the world, the smartphone has become the sole computing device.
“We have to ultimately offer a smartphone because in many countries of the world that is your first computing device. You know, there will be countries around the world where people may never own a tablet, or a PC, or a desktop. They will do everything on the smartphone. We’re a computing company; we have to take advantage of that form factor,” said Whitman.
Hewlett-Packard has not yet indicated which operating system its smartphone would use. The Palo-Alto based company uses Microsoft’s (NASDAQ:MSFT) Windows operating system for its personal computers and Windows 8 could be a boost for the phone, but another option is Google’s (NASDAQ:GOOG) Android mobile OS. For Whitman, the key element of the phone’s design is its hardware, not its software.
“We’ve got to get it right this time,” Whitman said on Fox. Her words, “this time,” refer to Hewlett-Packard’s last attempt to enter the mobile device market, when the company purchased Palm in 2010 for $1.2 billion. HP’s smartphones and tablet based off Palm’s WebOS platform did not catch on with consumers.
But for now Hewlett-Packard is still a personal computer company, and in the past months Whitman has worked to trim down the company with the biggest round of employee layoffs in history. The hardware and software manufacturer laid off 2,000 workers earlier this month, which increased layoffs to 29,000 through Oct.31, 2014.
The company’s stock prices have declined along with the company’s personal computer sales. Shares reached an 8-year-low on August 30, sinking to $16.77.
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