Management Changes Can Result in a Rally: Hewlett-Packard Company (HPQ), Dell Inc. (DELL)

The troubles of Hewlett-Packard Company (NYSE:HPQ) and falling sales of the PC industry are no secret. The company was once the largest PC and printer manufacturer in the world. The issue here is not industry dominance, as Hewlett-Packard Company (NYSE:HPQ) is still placed pretty well in both the PC and printer industries–it’s an issue of maturing industries. HP faces tough competition from the Chinese technology giant Lenovo (NASDAQOTH:LNVGY), which owns the world famous laptop brand ThinkPad, which originally belonged to International Business Machines Corp. (NYSE:IBM). The decline in HP’s PC shipments suggested that the company might fall behind Lenovo, but recent data could mean that HP retains its top spot.

The chart below shows the consistent decline in both share price and revenues at Hewlett-Packard Company (NYSE:HPQ). The company has failed to drive growth from other sources to account for the decline in the printer and PC segments. The primary culprit has been the rise in the popularity of handheld devices. For instance, tablets are fast becoming an alternative for computing and threaten the entire PC industry. These devices are also very useful for reading on the go, a job which once belonged to printed paper. Therefore, this revolution has not only reduced the demand for the printed paper, but has also shifted computing away from PCs.

HPQ data by YCharts

While the growth in its two primary segments was slowing down, Hewlett-Packard Company (NYSE:HPQ) was not sitting idle. In the last few years, the company has made some of the worst acquisitions of the technology sector. The Autonomy acquisition leads the race of HP’s ill-fated attempts to stop its declining sales. HP acquired the British software company Autonomy back in 2011 for a whopping $11.1 billion, and recently wrote off $8.8 billion off its value. Autonomy was not the only folly of Hewlett-Packard Company (NYSE:HPQ); other major failed acquisitions include EDS and Palm. During this time the company lacked the leadership that could have turn it around and was being led by the much criticized CEO Leo Apotheker. He was also one of the driving forces behind Autonomy’s acquisition. The company was therefore placed in such a severe crisis by its directors, which could not stop making terrible acquisitions.