HP Blames God for Bad Quarter

By Freddie Pierce
CEO of Hewlett PackardMeg Whitman has been doing damage control since the last quarterly report showed profits drop by 44%. Revenues also fell by 7%, u...

CEO of Hewlett Packard Meg Whitman has been doing damage control since the last quarterly report showed profits drop by 44%.  Revenues also fell by 7%, underperforming expectations – and Whitman blames the act of God that compromised their supply chain.

Last year’s Thailand floods left sterile labs swimming in carp, stemming the flow of hard drives and causing a global market imbalance.  Whitman maintains that HP’s procurement strategies are “world class”, but acknowledges that their supply chain needs to be strengthened to prevent this happening again.

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Still, the fact remains that it was, in Whitman’s own words, “a tough quarter”.  The floods are no doubt a major factor in the profit loss, but HP seemed unprepared for the crisis, and critics allege that the clean-up and reboot took too long, considering the stakes.

What money HP didn’t lose to the rain it lost to Apple, whose market share in personal computers exploded with the introduction of the iPad and iPad 2.  As the marketplace got swept up in tablet fever, HP lost some of its appeal and failed to capture the imagination of consumers.  (The quarterly report also showed personal computer sales down 15% over last year.)

Moreover, in scrambling to fill the shortage, HP was forced to compromise on quality and ended up delivering “a less richly configured product” to consumers.  This served to further dilute a brand much in need of strengthening.

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