CIOs should assign a ‘risk premium’ to HP,says Ovum

Ovum has recommended the CIOs to observe caution before dealing with HP

In a precautionary comment made on the corporate affairs at Hewlett-Packard, Carter Lusher, Research Fellow at the research and consultancy firm Ovum has warned CIOs to exercise caution before making any strategic commitment to investing in HP’s products or services.

Lusher says: “HP is flailing, causing more uncertainty and increasing the risk of doing business with it. As a consequence, CIOs should beware of the downsides of making major commitments to HP products and services.”

Stating that the scenarios for HP and its customers range from poor to bad to worse, Ovum recommends that CIOs and IT organizations assign a ‘risk premium’ to doing business with Hewlett-Packard negotiating for deeper discounts and better packaging. “CIOs should also explore new terms and conditions that protect the company should HP be broken or experience major disruption to its business.”

These comments have come in the wake of the media reports that Hewlett Packard’s Board of Directors was to decide on whether or not to remove Leo Apotheker, the present chief executive officer. “Regardless of whether it is a rumor or otherwise … the damage has already been done. This rumor and any actual action that the Board might make only reinforces that HP is a company that is in severe disarray. That the Board would be considering a change in CEO less that 10 months after Apotheker took over as CEO is a damning indictment of not just the new CEO, but also the Board itself,” Ovum states.

These times of difficulties may not be good for the organization, its people, and its customers according to Ovum who mentions that the people at HP are demoralized after 13 years of job cuts and cost rationalization hinting at the possibility that the key officials and people may be on the verge of leaving the company. “Other ways this turmoil impacts HP includes critical initiatives that stall, strategy and messaging change once more, and sales drop off as customers delay signing contracts. If Apotheker is fired then investors would start demand that the company be broken up to unlock the value of the components, leading to even more uncertainty,” the research firm states in a media release.

As per the latest information, Hewlett-Packard's board ousted President and CEO Leo Apotheker, replacing him with Meg Whitman last week.

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