After we published the chart, a friend emailed to say, “Hurd destroyed the company. Gutted R&D, which was the cardinal sin. It was always an engineer’s company. He financialized it. And in so doing, set in motion the wheels of doom.”
From 2010, here’s a look at how R&D as a percentage of revenue fell under Hurd’s watch.
Anything jump out in that chart?
When Hurd was pushed out, an ex-HP engineer told Joe Nocera slashes in the R&D department was, “why H.P. had no response to the iPad! . ” Apple managed to make the iPad while spending less on R&D, so we’re not sure that totally adds up.
It’s not how much you spend on R&D, it’s what comes of it.
As for the charge that Hurd “financialized” HP, well, that may be true. But, he seemed to be at least somewhat in control of where the company was going. The two CEOs since Hurd have no clue, it seems, about what to do with HP.
This chart (below) from ISI Group tells you all you need to know about the fate of cable TV in the age of the iPad: Since Q1 2010, 2.3 million people have stopped subscribing to pay TV as delivered by cable TV companies such as Cablevision, Comcast, DirecTV, Time Warner Cable, Dish, Verizon, and AT&T.
Currently, only 41.5 million Americans watch TV on pay cable.
I’ve been arguing for a while now that Americans are on the cusp of a dramatic change in how they watch video. They’re moving to video over the internet. Traditional TV is dying, in much the same way that in the mid-2000s we all largely stopped using hardwired telephones to make calls in favor of wireless mobile cellphones.
Hardwired phones are still a big business, of course, and most households still have them. But they’re really a vestigial offshoot of whatever bundled communications package you’ve bought.
It looks like cable is about to go the same way. Although its subscriber numbers are dwindling, subscriber numbers for satellite TV and broadband phone/internet service remain relatively healthy, as the second chart (below) shows. That suggests to me that there is a growing number of households choosing a broadband package with the internet as their top priority, and a dwindling number choosing it based on TV.
Ironically, the fall has come at a time when cable is making more ad money than ever. It’s a supply-and-demand issue: It may be that cable TV’s audience is dwindling, but it’s still one of the few venues that reliably delivers millions of eyeballs all at once.
First, the cable TV chart, based on numbers from ISI Group:
Here’s the market share situation. Note that 2011 was a threshold year, when cable slipped from having more than 50 percent of the market to less:
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Only five percent of ratings on companies in the S&P 500 are sell ratings.
That’s right: 95 percent of ratings tell investors to hold or buy and only 5 percent say you should sell.
- Most stocks–especially growth stocks–generally trend up over the long haul, so saying SELL often means betting against the odds and/or making a short-term timing call.
- Stocks with excellent fundamentals don’t often go down just because they’re “expensive”–instead, they just get more expensive. So saying “SELL” based solely on valuation often sets the analyst up to be wrong.
- The lack of SELL ratings makes SELL ratings sound like a complete condemnation of the company, to the point where it seems the analyst has a vendetta against it. The more polite way to tell people to sell, most folks on Wall Street whisper, is to say “hold”–or just ignore the stock altogether.
- The issuance of a SELL rating often drives a stock down, hurting investors who own it. These investors will not usually say “thank you.” Instead, they’ll want your head.
- Most investors are long-only, meaning they can only buy stocks, not short them. Thus, “SELL” ratings are only useful to hedge funds and investors who already own stocks.
- Most companies refuse to talk to analysts who hit them with SELL ratings, thus reducing the analyst’s ability to gather information about the company.
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