Twinkies vs. HP: Which Brand Will Enjoy Sweeter Recovery?
Question: What do Hewlett-Packard (NYSE: HPQ) and Hostess Twinkies have in common? Answer: Both are made from roughly six ingredients; both are suffering from changing consumer and tastes and corporate mismanagement; and both will eventually enjoy some sort of renaissance comeback. Which brand will have a faster, sweeter recovery? The VAR Guy invites you to chew on this analysis.
First, let’s start with the facts. The six primary ingredients of each brand:
- Twinkies: (1) Wheat flour, (2) sugar, (3) corn syrup, (4) niacin, (5) water, (5) high fructose corn syrup and (6) shortening.
- HP: (1) An abandoned garage that once stood for innovation; (2) a board of directors that sours on CEOs about every two years; (3) falling hardware sales; (4) missed software opportunities; (5) under performing IT services revenues; (6) and an inability to execute on acquisitions.
Sick To Your Stomach…
Wow, neither brand looks very appetizing at the moment. Things are particularly bad as Hostess tries to liquidate its various businesses — including Twinkies — and HP pursues legal action against former Autonomy executives who allegedly misled the company during M&A discussions. (Autonomy’s former CEO denies any wrongdoing.)
..But A Promising Mix…
But here’s the thing. While the individual ingredients don’t look appealing, mix it all together and you actually can get a very appealing outcome.
- Twinkies: Despite all those questionable ingredients, is there a sweeter treat in American lunch boxes every day?
- HP: What if all those struggling individual businesses were actually managed and integrated, to give partners and customers an end-to-end IT supplier?
…Will Deliver Sweet Success
Both brands seem dysfunctional at the moment. But The VAR Guy is predicting a comeback for both players.
- Twinkies: Critics say the brand is damaged because Americans are eating healthier. The VAR Guy says nonsense. All those critics said the same thing about McDonald’s when that company was mismanaged. Americans will always love junk food. We crave junk food. It’s up to Twinkies to manage its business so that Twinkies has plenty of calories PLUS a healthy profit margin. It can be done.
- HP: Remember, IBM was left for dead in the early 1990s. Apple nearly went bankrupt in the late 1990s. Sure, HP must face the reality of changing consumer tastes — the shift from PCs to tablets and smartphones. But here again let’s focus on history: Mainframes “died” in the 1990s yet IBM continues to sell mainframes in a profitable manner today. HP will eventually do the same with its struggling printer and PC businesses. The bigger challenge involves a decade of HP mismanagement, which CEO Meg Whitman is now trying to fix.
So, which brand will recover first? That’s easy. Twinkies. The VAR Guy is craving one right now. It’s time for HP to start developing products people crave as well. It will happen. Surely, Whitman is cooking up some sort of winning product strategy in the old HP Garage.
HP Invent. Again. It will happen. Chew on that.