Can Windows 8 Sell Without Hewlett-Packard Employees?

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Hewlett-Packard
HPQ
may not be able to sell Microsoft's
MSFT
new Windows 8 platform…that is, if they don't have enough people to do so. The tech company is expected to
let go of employees much faster
than previously anticipated, losing about 11,500 over the next month or so. A recent drop in PC consumer interest has troubled the likes of Dell
DELL
and Hewlett-Packard, who stated that it would cut about 27,000 employees by the end of fiscal 2014 in an effort to restructure the business. The company was originally set to dismiss 9,000 people this year alone, but it appears downsizing has been put on the fast track in order to turn business around. With layoffs and below consensus quarterly earnings polluting the industry, where does the PC drop leave Microsoft's impending operating system? With struggling Hewlett-Packard and Dell both set to introduce a slew of Windows 8-based products, the company may be fighting a losing battle against high-profile competition such as Apple
AAPL
and Google
GOOG
. Luckily, interested consumers are not to fear - the Surface is here. From
price points
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to the expected release date, Microsoft's first original tablet has generated a fair amount of hype that could ensure the success of Windows 8, overall. While quite the
admittedly controversial piece of technology
, the Surface interface could popularize the new software, leading to consumer loyalty and the purchase of more Windows 8-backed products. Cell phones by Nokia
NOK
anyone? Still, problems at Hewlett-Packard remain a valid concern. Despite turnaround efforts, Hewlett-Packard came in
below consensus
in the third quarter on Tuesday, (revenues of $29.67 billion were just shy of the Street's $30.10 billion estimate), the company delivered a generally in-line performance. However, the proof of unceasing trouble is in the details. "Overall, EPS quality this quarter was poor with ~$10B in charges and we remain cautious on HP's weakening fundamentals, challenging macro conditions & deteriorating cash flow (missed DB by ~$0.5B). We cut estimates and our PT to $15 (7x EV/FCF). Maintain Sell," Deutsche Bank Analyst Chris Whitmore stated in Wednesday's report. Investors have taken notice of these challenges as well, as the stock has been hammered down nearly 6.7 percent in Wednesday morning trading. Hewlett Packard's Chief Executive Officer, Meg Whitman, maintains that the company performed as promised in the third quarter, calling the overall period "decent". Whether or not "decent" performances will be acceptable when Microsoft's new operating system launches is up for debate, but it's relatively safe to assume that Hewlett-Packard's current situation is not ideal for Windows 8 sales. Microsoft is currently up around 16.2 percent year-to-date, while partners Dell and Hewlett Packard are down approximately 22.4 and 30.4 percent year-to-date, respectively.
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Posted In: Analyst ColorEarningsNewsPrice TargetRetail SalesTopicsHotAnalyst RatingsGeneralBusiness InsiderChris WhitmoreDeutsche BankMeg WhitmanSurfaceWindows 8
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