Is Hewlett-Packard Going to Collapse?

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Hewlett-Packard (NYSE:HPQ) opened trading on October 8 near 52-week lows. The company’s stock took a beating on October 3 when CEO Meg Whitman announced that fiscal 2013 earnings might drop 10 percent, and brought year-to-date losses to over 45 percent.

According to The Washington Post, Whitman told investors, “The single biggest challenge facing Hewlett-Packard has been the multiple changes in CEOs. It’s going to take longer to right this ship than any of us would like.” Whitman is the sixth CEO since 2005.

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Speaking on CNBC, former CEO Carly Fiorina said, “Meg got dealt a very tough hand. Hewlett-Packard squandered five years of leadership by failing to invest where necessary.” One of these investing failures is likely the $13.9 billion acquisition of EDS in 2008, for which HP is taking an $8 billion writedown.

HP is trying to turn itself around in an environment dominated by competitors like Oracle (NASDAQ:ORCL) and IBM (NYSE:IBM). Both have aggressively stepped into the spaces that HP is trying to enter, including cloud computing and related enterprise solutions. HP has pointed to the cloud as one area where it could grow in the future, but rivals will be well positioned in the space by 2014, when HP is expected to begin pulling out of its slump.

Competition in the printing business is also likely to remain hot, as margins are expected to remain low while Lexmark (NYSE:LXK) and Canon (NYSE:CAJ) add pressure. Personal computing sales, an area where HP used to be a dominate force, have also been crushed in the face of lower demand.

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