Hewlett-Packard

Welcome back to the LMHS Invest Club blog! Today's company reigned supreme for over half a decade in the computing world, but has recently fallen off the throne and is no longer the top distributor of personal computers. Yes, Hewlett Packard (HPQ) is our company of the day. It was established in 1947, and is now headed by CEO Margaret Whitman. As we will soon reveal, HP was the leader in the PC industry for almost half a decade, but was surpassed recently by Lenovo. Why is HP breaking down like this? Let's take a look. Like the other companies we observe, HP experienced stunning growth in 1999 but plummeted thereafter by 2002 (we will talk about this very soon!). This tech company turned to a path of consistent growth in late 2005, maintaining it until the 2008 recession - HP was on the top of the world, and was the largest producer and distributor of personal computers. Since 2010, Hewlett-Packard has slowly been dwindling down, off the throne, and far from the top of the industry. Since reaching nearly $60 in 2010, HP rests not even at a quarter of that amount now. Considering the recent plummet, we can almost already conclude HP is a lost investment. Over a month ago, in early October, the company forecasted revenues a staggering 15% below the previous fiscal year. This vicious cycle can only hurt HP - less investing, less stimulation of growth, less internal spending for improvement, fewer sales, less revenue, and the cycle repeats. Unless the public or private investors put more money into the company, the cycle will continue and HP will eventually fall apart. Our best suggestion would be for the company to either split or shut down the personal computing division, which hosts the majority of yearly deficit. Simply put, HP better improve their computers or Lenovo and others will push them in the dust.