The Hewlett-Packard Truth Serum Call

 Wehere at NotMakingThisUp began wondering what would happen on tonight’sHewlett-Packard earnings call if short-selling terrorists had managed to injecttruth serum in the plastic water bottles that every hip Silicon Valley execcarries with them—environmental impact be damned—when they make a presentationor just want to look cool sipping from while they contemplate a question at oneof those Silicon Valley confabs before beginning their answer with, “So…” andrepeating the question slowly while they figure out how to answer it. Here goes…
 CFOCathie Lesjack: “The following discussion is subject to all sorts of riskfactors, and since most of your clients have already lost a lot of money in HPstock by listening to me in the past talk about how great we were doing andtaking it at face value, I figure you should already know enough not to paymuch attention to what we’re going to say.”  CEOMeg Whitman: “Thanks Cathie.  We’regoing to dispense with reading the press release and the boo-ya stuff, sincemost of you know how to read—at least you can read everything but a balancesheet.  (Giggles)  Operator?” Operator:“Thank you.” (Reads instructions)  “Ourfirst question is from the line of Glen Obvious.  Mr. Obvious? GlenObvious: (Confused) “Hey, thanks. That was quick.  Umm…” Whitman:  “Operator, Glen, is trying to figure out whatto congratulate us for, because he always starts out saying ‘congratulations’on something so his poor clients who own our stock feel better no matter howbad the actual news is.  Why don’t youmove on to the next question while Glen gets his brain going.” Operator:“Yes ma’am.  Next is Janet Literal.” JanetLiteral: “Thank you for taking my question—” Whitman:  “Why wouldn’t we?  This is a conference call.” Literal:  “Well, I always say that…so you’ll think wellof me.”
 Whitman:  “Well cut it out.  We’re all grown-ups here.  You don’t have to thank us for foisting dopey acquisitions, massive write-offs, a negative tangible book value, ahighly leveraged balance sheet and non-GAAP earnings on America’s smallinvestors.  Just get on with it.” Literal:  “Okay—well, that’s my question: you don’thave any non-GAAP numbers in thepress release.”
 Whitman:  “Yeah, we figured since those aren’t actuallybased on ‘Generally Accepted Accounted Principles,’ we should probably startgoing with just plain old GAAP.  It’s alot closer to the truth that way.” Literal:  “But these GAAP numbers are terrible.  You didn’t make any money.” Whitman:“Bingo.” Literal:  “So how come your non-GAAP guidance was somuch better than this?” Whitman:  “D’oh!” Literal:  “I’ll get back in the queue.” Whitman:“We won’t hold our breath, honey.  Next!” Operator:  “Your next question is from FredForehead.  Mr. Forehead, your line isopen.” FredForehead:  “Thank you for—oh, sorry, nevermind that.  Meg, how should we thinkabout the revenue decline?” Whitman:  “Youwant me to tell you how to think about something?! Didn’t God give you a brain?”   Lesjack:“Good gravy, Meg mentioned ‘God’! Operator, can we excise that from the replay?” Whitman:  “Is that really a problem?” Lesjack:  “It is if the California Political Police arelistening.”Operator: “But she didn’t specify a Judeo-Christian ‘God,’ ma’am.” Lesjack:“You’re right.  Thank you operator.” Operator:  “No problem. I just wish I got your pay grade.” Lesjack:  “Beg your pardon, operator?” Operator:   “Well, for starters, I never financed a $10 billion acquisition that went bad in ninemonths.” Lesjack:  “Hey, I thought Autonomy was going to be agreat deal for us!” Operator:  “At 11-times revenue and 24-timesEBITDA?  Puh-leeze.” Lesjack: “And I’ll ask you to excise that from the replay, too.” Operator:  “Don’t hold your breath, honey.” Lesjack:  “In any event, our corporate counsel has justhanded me a note reminding everyone on this call that our unintentional mentionof ‘God’ is inclusive of any ‘God,’whether that be a Buddhist ‘God’ or a Muslim ‘God’ or an atheist ‘God’— Whitman:  “What is wrongwith you?  Get on with the Q&A.” Lesjack:  “Sorry. Operator, is Fred Forehead still on the line?” Forehead:  “Yeah, still here.  So how should we think about—” Whitman:  “Careful…” Forehead:  “Sorry. I just don’t know how to ask a question without asking you how I shouldthink about something.” Whitman:  “Next!” Operator:  “Beth Band-Aid, your line is open.” BethBand-Aid:  “Thank you so much.  This ‘negative tangible book value’ youmentioned earlier…what exactly does that mean?” Whitman:  “Are you serious?” Operator:  “Yes she is, ma’am.  I’ve heard this girl ask questions on fourhundred freaking conference calls, and she wouldn’t know GAAP accounting from atomato.” Whitman:  “Well, for starters, it’s negative $6 pershare—” Band-Aid:  “Did you say ‘Negative’?” Operator:  “Yes she did, Beth.  It’s negative.” Band-Aid:  “Well, what, exactly does that mean?” Operator:  “It means that in all of recorded time thefolks at Hewlett-Packard have managed to lose more money on write-offs of bad acquisitions, one-time charges that happen more than once, and share buybacks at high prices to offset options issued at low prices, than they ever made selling computers and printers, that’swhat it means.” Band-Aid:  “Cathie, is that true?”
 Lesjack:“Uh…yes…but…” Operator:  “It also means I should have her job.” Band-Aid:  “Meg, would you agree with that?”
 Whitman:  “Well, now that you mention it, that’s a damn good way to think about it…”
Jeff MatthewsAuthor “Secrets in PlainSight: Business and Investing Secrets of Warren Buffett”(eBooks on Investing,2012)    Available now at Amazon.com
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