Voice of the Industry
Speaking of the Moral Compass
By Elizabeth Gooding
Published: May 17, 2011
In yesterday’s post I talked about people who have a moral compass that doesn’t point due North. In some cases it is like the compass in the “Pirates of the Caribbean” movies carried by Captain Jack Sparrow which points to what his heart most desires. Well, apparently there is one of those funky compass folks at Hewlett Packard (you know who you are) who leaked an internal memo that made its way to a reporter at Bloomberg .
The leaked memo was from CEO Leo Apotheker to his top executives in which he warned that “Q3 is going to be another tough quarter, one in which we will be driving hard for revenue and profit.” He goes on to say, “We have absolutely no room for profitless revenue or any discretionary expenditures.”
I don’t think that it would be shocking to find similar statements in a memo from any CEO in print manufacturing, or many other sectors of the economy today, yet it caused an immediate stock plunge of HPQ when reported by Bloomberg under the heading of “Hewlett-Packard CEO “Expects Tough Third Quarter.”
I doubt that whoever leaked this memo truly got what their heart desired, but they certainly caused a lot of heartburn and possibly heartache for others. This may have cost the jobs of some of their colleagues or impacted the pension funds of people they don’t even know.
According to a regulatory filing yesterday (also reported by Bloomberg) Paulson & Co., the $36 billion hedge fund founded by John Paulson, bought 25 million shares in Hewlett-Packard, valued at about $1 billion. Paulson is counting on a successful restructuring of HP – that’s his overall investment philosophy anyway. It suggests that HP’s memo-related stock issues may be short-term.
Regardless of the short-term play of the stock, HP’s employee loyalty challenges are a concern. And, like the statements of their CEO, I would not be surprised to hear of similar employee loyalty issues at any of the other major print manufacturers. One foundational aspect of a brand is the company’s relationship to its customers. Another is the company’s relationship with its employees. At some companies there appears to be mutiny afoot. Loyalty should be a code, not just a guideline. Without it, one pirate can scuttle the ship.