Hewlett Packard: So Far, So Good …

“So far, so good. But it isn’t the fall that matters, it’s the landing.” We don’t know if Meg Whitman, boss of Hewlett-Packard, has seen the movie “La Haine,” but she seems imbued with this famous line from the film by Mathieu Kassovitz.

In the movie, this is what a man who has jumped from the fifth floor repeats to himself for reassurance as he falls. In Silicon Valley, it could be a way of keeping up morale when an airplane no longer has an engine.

Appointed head of the computer group in September 2011, Mrs. Whitman declared to analysts on Thursday, May 22, that she was “pleased to report that HP’s turnaround remains on track.” It depends on your point of view.

We have to recognize that the CEO of the former world leader in PCs has been pretty busy over the last two and a half years. Admittedly, HP’s number-one spot in this market was overtaken last year by Lenovo, the Chinese company. But the health of the group has clearly improved.

It All Gets More Complicated

The computer company went back to generating cash flow and in 2013 its net debt was reduced by 40 percent to $10 billion. When the ex-boss of eBay was called to the rescue by a board of directors panicking after having fired two bosses in 13 months, Mark Hurd and Leo Apotheker, this debt amounted to over $22 billion.

The New York Stock Exchange is grateful to this 57-year-old woman for having brought stability and order back to the company, founded 75 years ago in Palo Alto, California by Bill Hewlett and Dave Packard. HP shares have gained 14 percent since the start of the year, when the S&P 500 index limited its increase to 2 percent. In 2013, the security had already jumped by 87 percent on Wall Street.

So far, so good! And then? It all gets more complicated. That’s because the main problem that has faced HP for many years — growth — is still not resolved. Accounts published on Thursday show that sales have fallen for the 11th quarter in a row. While the PC market was destabilized by the sudden emergence of tablets and smartphones, HP’s other activities — printers, IT services and software — aren’t succeeding in taking over the reins.

Acquisitions

Between 11,000 and 16,000 additional staff members are going to pay the price for this situation. The new round of job cuts announced by Mrs. Whitman brings the total number since her arrival to 50,000 — around 15 percent of staff.

These endless reductions in the company’s area of activity have allowed the accounts to get back on track despite a reduction in turnover. But unless its restored financial health is used for acquisitions, this does not constitute a strategy.

HP, like everyone else, is talking of developing areas such as security, “big data” and the cloud. But landing on a cloud won’t be easy.