Event: Mid-morning Wednesday, struggling technology company Hewlett-Packard (HPQ) cut guidance for 2013. Shares of the already depressed company plunged on the news, hitting 9-year lows. CEO Meg Whitman blamed the changed outlook to executive turnover that has delayed the turnaround at the company. Shares of Hewlett-Packard continued the decline on Thursday with a more than 3% drop in early trading.
Analysis: What a crock of you-know-what. For Meg Whitman to blame executive turnover for the problems at the company is hubris, plain and simple. How about looking in the mirror when placing blame? The lack of execution or development of a new strategy that can reinvigorate what had been a stellar brand is the problem, not executive turnover. The news sounds like setting the stage for Whitman to take a slow and easy ride toward securing her own future while the future of the company she is running is very much in question. This company is in serious need of a game-changing event. Something big might be able to turn the tide of fortune. When I say big, I say a merger with Dell (DELL) or IBM (IBM) or something to that effect — assuming HP could pull that off. Without a game-changer, I think Hewlet-Packard is a dead stock. It will continue to drift lower as results are likely to be worse than the already somber outlook.
Action: Sell Hewlett-Packard stock immediately if owned. I’d also consider shorting shares or writing call contracts for easy money.
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