HP Investors to HP: Be Like Apple
When a company hosts it annual shareholder meeting, it usually presents one of the few opportunities that investors have to pitch questions directly at management.
Berkshire Hathaway's (NYS: BRK.A) (NYS: BRK.B) annual meeting is coming up in early May and promises to be an investorpalooza, as usual. We've even Foolishly compiled some travel tips for the festivities. Let's just hope that those rambunctious Fidelity fellows don't game the Q&A system anymore and hog the mic.
Iconic PC maker Hewlett-Packard (NYS: HPQ) just had its own annual meeting this week, and there was a notable theme among some of shareholders' questions: Why can't HP be more like Apple (NAS: AAPL) ?
According to AppleInsider, one investor mentioned that Steve Jobs described Apple's plan to compete with HP as simply having more innovative products and having technology that was "years ahead" of its rivals, particularly on mobile devices. The shareholder asked HP CEO Meg Whitman, "Do you think HP was and is innovative enough?"
Whitman gave Jobs and Apple credit for its success but said that HP is "No. 1 or No. 2 in every business" that it competes in, although that's certainly not true for mobile, since HP is taking a break from mobile after ex-CEO Leo Apotheker's bungling ways. It currently has no smartphones or tablets on the market, although it's gearing up for the open-source release of webOS later this year.
It's debatable whether you could consider mobile a space that HP plays in, but you can sure bet that it wants to. There's a good chance that HP will get back into webOS tablets, but an even better one that it will get in on Microsoft (NAS: MSFT) Windows 8 tablets when the software giant releases the next version of its flagship operating system later this year.
Whitman then touched on HP's focus on innovation and R&D. HP actually spent a little more on R&D last quarter than Apple did, although it comprises a larger portion of revenue, and HP's broad product line means those dollars are less focused.
R&D (% of Revenue)
Source: SEC filings; figures as of most recent quarter.
A second investor voiced frustration that HP doesn't have any retail stores with repair service like Apple Stores and their renowned Genius Bars, making him instead wait upwards of three weeks for a printer part to be shipped from one of HP's facilities on the East Coast when his printer broke.
Whitman pointed out that HP actually does have retail stores -- in Latin America. The company's Brazilian arm started opening retail locations in 2008, and HP has subsequently expanded its retail presence into other markets, including South Africa.
Source: HP.com. HP Experience store in Sandton City shopping center, Gauteng, South Africa.
Whitman offered nothing about embarking on retail domestically, saying she was unsure whether the economics would work out in the United States -- although she did say that the company is working on improving its website.
Come on down, HP investor No. 3, who similarly chalked up Apple's successes to its ability to innovate better than its rivals. This fellow wanted to know whether there was anything "cooking up in HP's labs" that might reinvigorate HP.
Whitman served up a couple of buzz phrases, saying that HP was built on the "power of innovation" and "disruptive technology," while acknowledging that it's lost sight in recent times as it focused on incremental improvements instead of game-changing breakthroughs.
She said HP needs to "place some bets on disruptive or revolutionary innovation" but also isn't open to making any more large acquisitions. Good thing, since investors weren't too pleased with Apotheker's Autonomy acquisition.
Wait for it ...
It's a tough gig when you've inherited the mess Apotheker left for Whitman to clean up. On top of that, he got a hefty payday of roughly $10 million for his services, destroying $52 billion in shareholder value in almost exactly one year's time, and that's before you include all the shares he's received.
Out with you, Apotheker! Return from whence ye came! Enjoy your executive air travel and paid relocation back to France or Belgium! OK, he probably did enjoy that. But that's it! Good luck enjoying all those millions of ... dollars. All right, he made out like a bandit, and he didn't even break any laws!
HP investors clearly want their company to be more like Apple, and probably not just by copying its industrial designs. Whitman has already said that most of 2012 will be spent mopping up after Apotheker. Maybe 2013 will be better.
There is a much easier solution for HP investors who admire Apple, one that doesn't require losing sleep or traveling to annual meetings to voice discontent. Sell your HP shares and buy Apple shares.
Even Whitman would probably admit that HP isn't going to be a top stock for 2012. Luckily, The Motley Fool's Top Stock of 2012 is just a click away. In this new special free report, we name one company that's poised for retail growth in emerging markets. Get the free report now.
At the time this
article was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Berkshire Hathaway, Apple, and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Apple, Berkshire Hathaway, and Microsoft and creating bull call spread positions in Microsoft and Apple. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.