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Are Changes Coming at Hewlett-Packard?

It is no secret that Hewlett-Packard (HPQ) has been struggling in recent years. The PC market has been slowly dying for years now, and Hewlett-Packard has not been able to adapt as quickly as it would have liked.

In the past Hewlett-Packard has tried to take a piece of the tablet market, but thus far it has yet to find any success. It is hoping to change that, with plans to introduce a new tablet which it believes will finally enable the company to capture some of the highly competitive tablet market.

Yesterday the company announced its new 7 inch tablet, the Slate, which will be running Google's (GOOG) highly popular Android operating system.

To make a splash in the tablet market, manufacturers must bring something unique, and the Slate's uniqueness comes in the form of Beats Audio, which the company claims is the first for a tablet. But will the addition of Beats Audio be enough to differentiate the Slate from the rest of the Android tablets which have already managed to gain critical market share?

Early reviews point out that there are, as expected, both good and bad aspects to the tablet.

On the positive side, the cost is extremely competitive at just $169, and the device appears to be of solid build. The back of the device is made with high-quality plastic, that joins to a stainless steel band that wraps around the edges of the tablet. By all accounts, the tablet has superior manufacturing standards to the majority of its competitors.

But the downside is that in order to make the tablet affordable, and at the same time give it high quality manufacturing, Hewlett-Packard had to cut costs somewhere, and unfortunately it chose to cut on display quality, and the processor.

The tablet has a display of 1024 x 768 pixels, which is likely to scare a lot of consumers. The Nexus 7, on the other hand, has a resolution of 1280 x 800 pixels, giving it a far superior picture quality.

Early reviewers also complained about the processor being sluggish. Apps were slow to open or even froze the tablet all together, and media playback was poor. These are two areas where consumers demand speed and if the tablets are unable to deliver here then it is hard to predict the tablet will find much market success.

Given the fact that Hewlett-Packard has tried and fail in the past to launch its own tablet, you would think that this time around it would have made sure to bring a high quality, fast tablet to market, but it appears that it is opting for a low cost alternative instead of focusing on building the best possible tablet.

In my opinion, this is going to hurt the tablet's success, and will wind up being yet another instance where Hewlett-Packard failed to understand the market.

Another big change that could be coming to Hewlett-Packard involves its board of directors. The company's board is up for re-election in a month, and its chairman, Ray Lane is in the hot seat. Investors already had plenty of reason to want new leadership, but the botched $11 billion acquisition of Autonomy Corp. has given them the perfect excuse to try to unseat him from his position, along with two other directors.

Lane is going to meet with some of the company's biggest investors today to plead his case as to why he should continue to serve as the company's chairman.

Investors will meet on March 20 to vote for the board, and William Patterson, the executive director at CtW Investment Group is leading a campaign to unset Lane. He believes that the company continues to pay the price for poor deal making, flawed oversight, and a general lack of accountability.

Given the company's stock performance in recent years, it is easy to understand investor frustration. Shares have fallen 60% over the last three years, and there is little reason to believe that current leadership will be able to turn things around.

Between the new tablet, and a possible board shake-up, big changes seem to be headed Hewlett-Packard's way. Whether or not these new developments will be able to bring value back into the company remains to be seen, but so far there is no reason to have much faith in Hewlett's future.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.