Bookends to the PC Era: Adam Osborne and Léo Apotheker
The recent news about Hewlett-Packard’s shift in strategic direction caught analysts by surprise and wiped $16B off the company share price on Friday. Commentators noted that CEO Léo Apotheker’s move confused many:
Apotheker, who gained a reputation for sharp business acumen when he headed up SAP, thoroughly flummoxed HP shareholders last week with what some analysts have called a “value destroying” $11.7 billion deal to buy British software maker Autonomy and for sticking a for-sale sign on HP’s PC division — thus scaring off clients for the year or so it will take to decide on the division’s future.
In preannouncing their decision to exit the business the world’s largest PC manufacturer is now faced with the challenge of finding a buyer for their Personal Systems Group at an attractive price. It remains to be seen how the spin-off will be handled and the price the eventual buyer will pay.
Apotheker’s announcement compares with a similar piece of value-destroying executive communication from the early days of the PC Era. Back in 1983, Adam Osborne, CEO of Osborne Computers, bragged about two new computers his company was developing. As Wikipedia notes:
These statements destroyed consumer demand for the Osborne 1 portable PC, and the resulting inventory glut forced Osborne Computer to file for bankruptcy on September 13, 1983.
This phenomenon, a preannouncement of a new product causing a catastrophic collapse in demand for older ones, became known as the Osborne effect.
We’ll have to wait to see if announcing that you need to sell a third of your business before a buyer is found will eventually become known as the Apotheker effect.
1 Comment so far
Leave a comment
Interesting comment in Forbes on HP’s history with the PC and how little the $10B Autonomy software acquisition will add to the bottom line.
By Ian on 08.23.11 10:28 am
Leave a comment
Line and paragraph breaks automatic, e-mail address never displayed, HTML allowed:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>