Replace Meg Whitman with MLS and HP with Follett. Otherwise the story is very similar. The family who owns stock should be very concerned. ZERO revenue growth. HP announced earnings Thursday evening that met Wall Street expectations. But it got there by slashing jobs -- not growing revenue. And that had investors doubting CEO Meg Whitman's statements that the tech giant's "turnaround remains on track" and that she can lead the company back to growth. No turnaround story. Where's the increase in Revenue? All Meg can do to maintain share price is cut more jobs.
6 replies (most recent on top)
Good post agree I except for the 2.5 billion annual at Follett, I think that is an old number, definitely won't be close to that this year.
Follett has laid off close to 1,000 employees and will soon be increasing that number, which is somewhere between 5-15% of full time employees (the temp employees distort the number of employees at Follett). Expect 1,500-2,000 total before ML is done. Like HP executives, the executives at Follett have huge stock options which is why the focus on stock price during town hall meetings. Revenue does not play a significant role in stock price, mostly earnings per share. Drive bottom line, and increase stock price.
HP is the same as Follett. Dying commodity PC industry, similar to dying commodity book industry. Also Revenue at HP is 100 billion for the quarter versus 2.5 billion annual at Follett. As a percent of sales Follett income 10% of revenue is very similar to HP.
But the real similarity is that neither executive leadership team has any innovation coming to drive revenue growth. Both companies will continue to decline and continue to cut to drive stock price. Although no employees received a bonus last year, the dividend was paid on shares of stock. In fact, the profits for last year were higher because no bonuses were paid.
Good point
HP is worse. While revenue growth was relatively flat, the still earned over $1 BILLION in profit in 3 months! Of course, if you're earning $1BILLION you should fire 15K people (in addition to the 50K people you've been firing the past 2 years).
HP will have reduced its workforce by roughly 20% in 4 years time, when this is all done. During that entire time, it has been raking in $4-$5BILLION in PROFIT every year with annualized sales over $100BILLION every year.
No, follett is a terribly managed company in a dying industry. It is in panic mode trying to find a niche so it can survive. They've hired proven failures to rescue the company and those failures are enabling management to take a pound of flesh from its best asset; its employees. HP is greedy and thriving when compared to follett (who's ownership is greedy and failing).
this pretty much sums it up
You nailed it.