Meg Whitman has a big job on her hands revitalizing Hewlett Packard (HPQ). I believe that she is up for the job and the opportunity is significant. HPQ needs to realign their expense structure to deal with the current market environment which is pressuring many of their businesses. I believe they should identify non-core businesses which can be sold to reduce the debt load. The Autonomy acquisition was one of the worst that I have ever seen as they took on a huge amount of debt and the company is already struggling to keep their sales flat. They got rid of Autonomy’s CEO which is not a good sign whatsoever. Capital management and innovation will be keys to HPQ’s success. Howard Schultz of Starbucks (SBUX) has done a masterful job incorporating new products and developing relationships with companies such as Green Mountain Coffee (GMCR) which have boosted sales. HPQ needs to focus on services, software, and the cloud, while utilizing their hardware businesses to generate cash flow. Reducing the debt load and strategically buying back stock are the best uses of capital, while any large acquisitions should be avoided.
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