Good riddance. That, along with a few expletives, is what you're likely to hear from Hewlett-Packard (NYS: HPQ) CEO Meg Whitman and team as they look back at 2012. Every company has a bad stretch here and there -- it happens. But 2012 can't get in the rearview mirror fast enough for HP and its shareholders.

The laundry list of miscues, bad news, and poor performance is long and fairly depressing. Unfortunately, it appears HP will start 2013 much as it's finished 2012 -- in shambles.

The latest, and not so greatest
With only a few trading days left in 2012, it's official: HP is the worst-performing stock of the 30 included in the Dow. Down over 45% year to date, the kind of run HP's stock would have to make in the remaining few days of 2012 to overcome its conspicuous "biggest loser" title, is borderline impossible. Why the bad tidings from analysts and shareholders alike? Unfortunately for HP, there are lots of reasons.


You've no doubt heard about HP's problems associated with Autonomy, last year's $10.3 billion acquisition headache. It appears the $8.8 billion charge HP took last quarter related to the purchase of the enterprise search leader is far from over. Turns out, rumors of the Justice Department joining the Autonomy party are true. According to HP's recent 10-K filing, the Justice Department informed Whitman and team last month that it would begin a probe into the Autonomy mess.

As if an $8.8 billion charge, and the "he said, she said" among former HP CEO Leo Apotheker, former Autonomy CEO Mike Lynch, and HP wasn't enough, now the Justice Department is joining the party. If there's an upside, HP shareholders will at least learn who was really at fault; what little consolation that'll provide.

The really bad news? The HP/Autonomy saga is just one of many problems Whitman is facing. With all that's going on with HP, and so little of it positive, holding on to key employees is yet another challenge for HP management heading into 2013.

The recent departure of 18 HP employees, en masse, is a bit fishy, according to HP; especially as all 18 ended up at the local, soon-to-be-functional GM facility. The petition that's since been filed by HP relating to the group departure comes on the heels of GM's announcement in October that it plans to hire as many as 3,000 HP employees currently on contract at GM.

Now, the rest of the story
HP needs to overcome more than its competition from the likes of Dell on the PC side of the business, Cisco in the IT-related products arena, and Microsoft's software and services solutions. As noted in its 10-K, HP is trying to reinvent itself, transitioning from the dying PC market to software services, cloud computing, and even the mobile marketplace. Along the way, HP will let as many as 29,000 employees go by the end of fiscal 2014 to get a better handle on overhead.

If you're a value investor, you might think HP is worth a look; after all, its share price is certainly down. Problem is, continual changes in management, numerous and massive writedowns, and a meandering effort to reinvent itself has left HP well behind the pack in almost every area. Dell, Microsoft, and Cisco have all taken steps to adapt to changing market conditions and opportunities, and all three are better value investment alternatives heading into 2013.

HP? It's losing employees it wants to keep and still struggling with bad acquisitions, of which Autonomy is merely the latest. Consider this: HP has spent over $67 billion buying companies for the past 10 years, and it currently sits at $27.6 billion in market cap. Ouch.

Irrespective of Justice Department probes, employee defections, and accounting nightmares, HP is having problems where it really counts: growing revenues in key areas. Both its enterprise and services units are underperforming, and these are the two areas in which HP wants -- no, needs -- to grow to remain relevant.

HP has taken the old adage "It'll get worse before it gets better" to new heights. Unfortunately for shareholders, things actually are getting worse for HP, and that's saying something.


 
 
 
 
 
 
 

The article It Just Keeps Getting Worse for Hewlett-Packard originally appeared on Fool.com.

Tim Brugger has no positions in the stocks mentioned above. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services recommend Cisco Systems, General Motors, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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