After reporting another disappointing quarter last week,
But what are its options?
First, streamline its operations through cost cutting and eventually sell itself to the highest bidder. One problem with this strategy is that HP is a too big company for a single suitor--though a large Asian company may be interested in buying parts or all of its operations. Another problem is that some of HP’s business units (e.g., PC) is on a secular decline as it faces fierce competition from
Second, divide the company into separate units. The problem with this strategy is that it undermines the synergies between its hardware and software business units that helps product pricing, while fends off competition. Besides, dividing the company up won’t solve the problem of declining business units.
Third, spin-off the declining business units and focus on services, capitalizing on the recent acquisition of enterprise software maker Autonomy. This strategy has its own limitations too, as it will pit HP against three “early-movers,”
Fourth, return to its innovative trait; develop its own internal resources and capabilities as Corning Inc. (GLW)—a 160 years old company—and Apple have been doing, coming up with the one innovative product line after the other.
Obviously, the fourth option is the most costly to execute, as it requires the commitment of additional resource on R&D, an area where HP lags behind its peers. In addition, this strategy takes a long time to yield the desired results. However, it is about time for HP leadership to learn from previous mistakes that brought the company into this financial situation.
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