Hewlett-Packard (HPQ) released earnings last week. The stock closed up 4.1% at the end of last week’s trading on adjusted earnings per share of $0.98, which beat Street estimates by $0.07 per share. Investors rewarded Hewlett-Packard, mostly because Meg Whitman threw investors a straight pitch and made a few tough decisions to allow the company to gain stability and build toward a better tomorrow.
Confidence In Meg Whitman
I believe Meg Whitman has been flawless in the execution of her vision for Hewlett-Packard’s future. When the board of directors hired Leo Apotheker to be CEO in 2009, the move was welcomed, and investors believed Apotheker would be able to grow Hewlett-Packard’s revenues. But Apotheker was not the leader that could take Hewlett-Packard to the next level. Meg Whitman, on the other hand, has been upfront and personal with investors and Hewlett-Packard employees. Whitman has been one of the keys to stabilizing Hewlett-Packard’s future plans.
Whitman announced a reduction in overall staffing of 27,000 by fiscal year end 2014. The layoffs, which represent 8% of the company, will save roughly $3 billion to $3.5 billion by the end of 2014. Hewlett-Packard acquired $40 billion worth of companies in the last six years, and this is the first significant layoff phase for the company in recent times. The money recuperated from the layoffs will be redirected into research and development, which is sorely needed.
I think research and development is the key to Hewlett-Packard’s future, and with the pool of highly skilled employees acquired in recent years, the redirected funds may score big dividends in the long run for Hewlett-Packard shareholders.To continue reading, click here.