Analyst: Hewlett-Packard is a 'Lazy Company'
Is Hewlett-Packard (NYSE: HPQ) a little too comfortable for its own good? One analyst thinks he knows the answer.
"The general view is that HP is a lazy company," Trip Chowdhry, Managing Director of Equity Research at Global Equities Research, wrote in an e-mail to investors. "However, customer[s] want HP to be around, as customers use HP to keep IBM [(NYSE: IBM)] disciplined."
While that issue could be overcome with a bit of motivation, laziness is not the only problem.
"HP's R&D team is weak," said Chowdhry. He believes that the company will acquire superior R&D through future acquisitions -- but it could take some time.
"[The] recruiting engine at HP is very weak," Chowdhry added. "HP can get talent only by acquiring smart companies."
Despite his perceived shortcomings, Chowdhry has faith in Hewlett-Packard's Services team. "Some data points [are pointing] to a very hyper-vertical strategy with HP Services team," he said. "If executed well, this may add to HP's success."
Chowdhry's comments do not seem to be deterring investors this week. Shares of Hewlett-Packard, which have risen more than 53 percent year-to-date, are currently up less than one percent.
These gains follow two years of losses. In 2012, Hewlett-Packard lost more than 46 percent of its value. The company dropped nearly 40 percent in 2011.
Even with its recent gains, Hewlett-Packard is still trading 80 percent below the company's all-time high. During the week of April 3, 2000, Hewlett-Packard traded at $78 a share. On Monday, the company trades at roughly $23.
Before his passing, Apple (NASDAQ: AAPL) co-founder Steve Jobs told Walter Isaacson (the author of the only official Steve Jobs biography) that he felt Hewlett-Packard was being "dismembered and destroyed."
"Hewlett and Packard built a great company, and they thought they left it in good hands," he said. "But now it's being dismembered and destroyed. It's tragic. I hope I've left a stronger legacy so that will never happen at Apple."
While that may have been true before, Hewlett-Packard is determined to turn things around.
Contrary to Chowdhry's assessment, Hewlett-Packard has actually been working very hard to improve its R&D initiative. The company recently revealed the fruit of its labor: a glasses-free 3D tech that resembles the hologram of Princess Leia in Star Wars.
The company also plans to bolster its bottom line by releasing one of the cheapest tablets available. Hewlett-Packard learned the hard way that consumers don't want to pay iPad prices for a cheaper device. Now the firm is attempting to rebound from that mistake.
Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or firstname.lastname@example.org. Follow him @LouisBedigianBZ
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