Computer giant HP has taken a shot at its archrival Dell, just a few hours after our post on how to conduct yourself in a public fight. HP gets good marks for its effort, which ranks as a small skirmish in a long battle between the two companies.
Earlier today, HP issued a scathing statement in response to news that archrival Dell had agreed to go private in a $24.4 billion buyout, led by a group of investors that includes CEO Michael Dell. The statement said:
“Dell has a very tough road ahead. The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell’s ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.”
It’s rare to see HP on the offensive after so many stumbles, and that fact alone makes the statement worthwhile from HP’s standpoint. It also has several other virtues:
It puts the focus on customers. Major transactions always distract top management, and product development, innovation and customer service all suffer as a result. HP is eager to have this be part of the conversation around the Dell deal.
It highlights a major, new weakness for Dell – its debt load. Debt scares people, regardless of its purpose. It’s one effect of the financial crisis and the endless attention given to the US budget deficit. HP is riding those fears and suggesting Dell’s debt burden will crimp innovation and investment. (Although Dell has lots of cash on its balance sheet and might pay down debt quickly.)
Sure, the statement could have been stronger by including a comment from CEO Meg Whitman, but personalizing it in that way would make it less effective. Besides, HP can always play that card later. HP could also roll out a few more facts to bolster its argument. But on the whole, HP has done well in this round by landing a few punches against its opponent.