Hewlett-Packard: How a Quiet Debt Binge Left the Company With Fewer Opportunities

A Wall Street Journal article methodically worked through what’s wrong at Hewlett-Packard (HPQ), where new products and innovation are sorely needed. But the Journal’s analysis was perhaps clearest in discussing finances. Over the last decade, H-P has added debt and spent down its cash and investments. The result is a company in less of a position to take advantage of opportunities, be they acquisitions or internal investments in new products and services.

HPQ Cash and ST Investments  Chart

HPQ Cash and ST Investments data by YCharts

It appears that stock buybacks in the pre-Meg Whitman days siphoned off a lot of cash, and at prices that look pretty steep today.

HPQ Stock Buybacks Chart

HPQ Stock Buybacks data by YCharts

Paying down debt, abstaining from big buybacks and building up its cash reserve won’t make H-P cutting edge again, but it will enable H-P to take advantage of opportunities as they arise. Competing against International Business Machines (IBM) and Oracle (ORCL) will get easier as H-P's finances get stronger.

Jeff Bailey is the editor of YCharts, which includes the just-released YCharts Pro Platinum for professional investors.



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