(Updates with comment from Lenovo.)
Say this for Hewlett-Packard — the beaten-down computer maker still has chutzpah. A little more than an hour after rival Dell said it would go private in a $24.4 billion leveraged buyout, Hewlett-Packard made a bid to nab customers by saying Dell faces “a very tough road ahead.”
“Leveraged buyouts tend to leave existing customers and innovation at the curb,” Palo Alto, California-based Hewlett-Packard said today in a statement. “Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.”
In some ways, Hewlett-Packard’s response could be seen as payback. When the company said in August 2011 that it would explore a spinout of its personal-computer business, sending its shares plummeting, Dell founder and Chief Executive Officer Michael Dell took to Twitter’s microblogging website to publicly gloat.
“Goodbye HP, Sorry you don’t want to be in PCs anymore. But we do more than ever,” he wrote.
Now, Dell is going private after a quarter-century as a public company in part to accelerate its transition away from low-margin desktops and laptops. Dell’s stock has lost more than half its value since January 2007, when Dell resumed his role as CEO. Once the PC market leader, Dell is now No. 3 behind Hewlett-Packard and Lenovo Group.
Dell “faces an extended period of uncertainty and transition that will not be good for its customers,” Hewlett-Packard said in the statement. “With a significant debt load, Dell’s ability to invest in new products and services will be extremely limited.”
Yet Hewlett-Packard’s plight is at least as dire. Its shares have plunged about 65 percent since former CEO Mark Hurd left in August 2010. The company has churned through CEOs — it’s now on its fourth leader since the middle of the last decade — and has been beset by strategy shifts, depleted product development and misguided acquisitions.
Shares of Hewlett-Packard climbed on the Dell buyout news, rising 2.4 percent to $16.57 at 1:55 p.m. in New York.
In 1997, as Dell’s business was on the rise, Michael Dell famously said Apple would be better off shutting down and returning the cash to shareholders. While no one is talking about Dell closing its doors, Hewlett-Packard is wasting no time in making hay.
Meantime, Lenovo is taking a more measured stance, declining to comment on the Dell news specifically, while saying that the financial actions of rivals won’t change its outlook.
“Our strategy is clear, our financial position is healthy and our business is very strong,” Beijing-based Lenovo said in a statement today. “We are focused on our products, customers and overall execution rather than distracting financial maneuvers and major strategic shifts.”