Tuesday, August 21, 2012

The Hewlett-Packard Truth Serum Call


 We here at NotMakingThisUp began wondering what would happen on tonight’s Hewlett-Packard earnings call if short-selling terrorists had managed to inject truth serum in the plastic water bottles that every hip Silicon Valley exec carries with them—environmental impact be damned—when they make a presentation or just want to look cool sipping from while they contemplate a question at one of those Silicon Valley confabs before beginning their answer with, “So…” and repeating the question slowly while they figure out how to answer it.
  Here goes…

 CFO Cathie Lesjack: “The following discussion is subject to all sorts of risk factors, and since most of your clients have already lost a lot of money in HP stock by listening to me in the past talk about how great we were doing and taking it at face value, I figure you should already know enough not to pay much attention to what we’re going to say.”
  CEO Meg Whitman: “Thanks Cathie.  We’re going to dispense with reading the press release and the boo-ya stuff, since most of you know how to read—at least you can read everything but a balance sheet.  (Giggles)  Operator?”
 Operator: “Thank you.” (Reads instructions)  “Our first question is from the line of Glen Obvious.  Mr. Obvious?
 Glen Obvious: (Confused) “Hey, thanks.  That was quick.  Umm…”
 Whitman:  “Operator, Glen, is trying to figure out what to congratulate us for, because he always starts out saying ‘congratulations’ on something so his poor clients who own our stock feel better no matter how bad the actual news is.  Why don’t you move on to the next question while Glen gets his brain going.”
 Operator: “Yes ma’am.  Next is Janet Literal.”
 Janet Literal: “Thank you for taking my question—”
 Whitman:  “Why wouldn’t we?  This is a conference call.”
 Literal:  “Well, I always say that…so you’ll think well of me.”
 Whitman:  “Well cut it out.  We’re all grown-ups here.  You don’t have to thank us for foisting dopey acquisitions, massive write-offs, a negative tangible book value, a highly leveraged balance sheet and non-GAAP earnings on America’s small investors.  Just get on with it.”
 Literal:  “Okay—well, that’s my question: you don’t have any non-GAAP numbers in the press release.”
 Whitman:  “Yeah, we figured since those aren’t actually based on ‘Generally Accepted Accounted Principles,’ we should probably start going with just plain old GAAP.  It’s a lot closer to the truth that way.”
 Literal:  “But these GAAP numbers are terrible.  You didn’t make any money.”
 Whitman: “Bingo.”
 Literal:  “So how come your non-GAAP guidance was so much better than this?”
 Whitman:  “D’oh!”
 Literal:  “I’ll get back in the queue.”
 Whitman: “We won’t hold our breath, honey.  Next!”
 Operator:  “Your next question is from Fred Forehead.  Mr. Forehead, your line is open.”
 Fred Forehead:  “Thank you for—oh, sorry, never mind that.  Meg, how should we think about the revenue decline?”
 Whitman:  You want me to tell you how to think about something?!  Didn’t God give you a brain?” 
 Lesjack: “Good gravy, Meg mentioned ‘God’!  Operator, can we excise that from the replay?”
 Whitman:  “Is that really a problem?”
 Lesjack:  “It is if the California Political Police are listening.”
Operator:  “But she didn’t specify a Judeo-Christian ‘God,’ ma’am.”
 Lesjack: “You’re right.  Thank you operator.”
 Operator:  “No problem.  I just wish I got your pay grade.”
 Lesjack:  “Beg your pardon, operator?”
 Operator:   “Well, for starters, I never financed a $10 billion acquisition that went bad in nine months.”
 Lesjack:  “Hey, I thought Autonomy was going to be a great deal for us!”
 Operator:  “At 11-times revenue and 24-times EBITDA?  Puh-leeze.”
 Lesjack:  “And I’ll ask you to excise that from the replay, too.”
 Operator:  “Don’t hold your breath, honey.”
 Lesjack:  “In any event, our corporate counsel has just handed me a note reminding everyone on this call that our unintentional mention of ‘God’ is inclusive of any ‘God,’ whether that be a Buddhist ‘God’ or a Muslim ‘God’ or an atheist ‘God’—
 Whitman:  “What is wrong with you?  Get on with the Q&A.”
 Lesjack:  “Sorry.  Operator, is Fred Forehead still on the line?”
 Forehead:  “Yeah, still here.  So how should we think about—”
 Whitman:  “Careful…”
 Forehead:  “Sorry.  I just don’t know how to ask a question without asking you how I should think about something.”
 Whitman:  “Next!”
 Operator:  “Beth Band-Aid, your line is open.”
 Beth Band-Aid:  “Thank you so much.  This ‘negative tangible book value’ you mentioned earlier…what exactly does that mean?”
 Whitman:  “Are you serious?”
 Operator:  “Yes she is, ma’am.  I’ve heard this girl ask questions on four hundred freaking conference calls, and she wouldn’t know GAAP accounting from a tomato.”
 Whitman:  “Well, for starters, it’s negative $6 per share—”
 Band-Aid:  “Did you say ‘Negative’?”
 Operator:  “Yes she did, Beth.  It’s negative.”
 Band-Aid:  “Well, what, exactly does that mean?”
 Operator:  “It means that in all of recorded time the folks at Hewlett-Packard have managed to lose more money on write-offs of bad acquisitions, one-time charges that happen more than once, and share buybacks at high prices to offset options issued at low prices, than they ever made selling computers and printers, that’s what it means.”
 Band-Aid:  “Cathie, is that true?”
 Lesjack: “Uh…yes…but…”
 Operator:  “It also means I should have her job.”
 Band-Aid:  “Meg, would you agree with that?”
 Whitman:  “Well, now that you mention it, that’s a damn good way to think about it…”

Jeff Matthews
Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett”
(eBooks on Investing, 2012)    Available now at Amazon.com

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The content contained in this blog represents only the opinions of Mr. Matthews.   Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.  This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever.  Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored.  And if you think Mr. Matthews is kidding about that, he is not.  The content herein is intended solely for the entertainment of the reader, and the author.

1 comment:

Ben said...

I read this and couldn't help but think about Groucho Marx. As much as I want to hate HP, you should really pick on Dell too. They seem just as bad or worse to me. But funny post.