Kaminsky's Call: Is Hewlett-Packard's Dealmaking a Mistake?


It may be too early for Halloween talk, but The Legend of Sleepy Hollow inspires today's K-Call. Playing the role of Ichabod Crane this week is ArcSight, after a notable stint by 3Par.

Hewlett Packard

Of course, Hewlett Packard is The Headless Horseman.

This tale of horror and gloom may end the same way for HPQ, and here's why.

We have talked on multiple occasions about those shareholders who base their investment decisions on the gigantic personalities of CEO's. Mark Hurd was certainly one of them before his successful reign at HPQ came to a crashing halt this summer in disgrace.

As Hurd, with the help of Larry Ellison, has picked up the pieces with remarkable swiftness, Hewlett-Packard has decided to carry on in the short-term as a dealmaking machine. First, they battled Dell for the right to 3Par, and now this week announced its plans to acquire ArcSight in another billion dollar deal.

Which brings us to Washington Irving's classic.

How does Headless Hewlett-Packard expect to name a successor in the right manner when they are forcing the individual to favor the deals? The company will either limit itself by eliminating candidates who suggest opposition or endure conflict with a hire who questions the acquisitions.

I understand the need for HPQ to appeal to shareholders bruised by the Hurd episode by showing they are a force with vision. But making deals before appointing the new CEO might be a mistake. And Hewlett-Packard does not want to be a ghost feared by investors.

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

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