Hewlett-Packard Co. has become the fastest-moving company in the technology industry, but not in a good way.
After a brutal 12 months that saw the company’s stock price cut almost in half, HP’s board of directors has fired its third CEO in six years. Léo Apotheker, who took over less than a year ago and this summer proposed some of the biggest and most controversial changes in HP’s history, has been ousted in favour of Meg Whitman, the hugely successful former eBay head who, in recent years, has become better known for her far less successful political career.
Perhaps most surprisingly, Ms. Whitman’s hiring is likely to have little impact on Mr. Apotheker’s audacious plan to, among other things, spin off HP’s personal computing division – which, when it was announced last month, was derided by many investors. During his short stint at the company, Mr. Apotheker also spent more than $10-billion (U.S.) to purchase business-software maker Autonomy, and killed HP’s TouchPad tablet and WebOS operating system only a year after the company had kicked off both projects with the $1.2-billion purchase of Palm. The move essentially shut the door on HP’s entry into the fast-growing mobile market.
In all, the cataclysmic changes made HP the target of criticism in much of the tech industry, as long-time enterprise customers opted for more stable manufacturing partners, and investors abandoned the stock.
“HP’s strong customer brand is being damaged by the uncertainty of the board and repeated CEO turmoil,” Forrester analyst Frank Gillett said in a note. “The company is in a difficult strategic position. It might undo the planned PC spinout, but only if they value the supply chain synergies – the option to expand in mobility is gone.”
But in a conference call with analysts, Ms. Whitman and Ray Lane, a board member who now becomes the board’s executive chairman, indicated they agree with much of Mr. Apotheker’s strategy. Instead, Mr. Lane noted, it was a string of disappointing quarterly earnings results, as well as the poor way in which Mr. Apotheker communicated the PC unit spinoff in August, that got the CEO fired.
“We’re embarrassed about the communication of these decisions,” Mr. Lane said. “We need renewed leadership. Today we took a great step in that direction.”
It is now up to Ms. Whitman to undo the damage. The 55-year-old is perhaps best known in business circles as the former head of eBay. The online auction house was posting less than $100-million in revenue when she took over in 1998. By the time she left, a decade later, that had risen to almost $8-billion.
Although much of eBay’s success during that decade has been attributed to Ms. Whitman, she also took some of the blame for several missteps. Perhaps the biggest was eBay’s $2.5-billion purchase of Internet communications company Skype, which ultimately did nothing to help the auction site’s core business.
Ms. Whitman has been described in various media reports as a demanding leader who sometimes lets her temper get the better of her. On one occasion in 2007, she allegedly shoved an eBay employee in a conference room (the employee threatened to sue, and the matter was eventually resolved with a settlement believed to be about $200,000).
More recently, Ms. Whitman was the Republican party’s candidate for governor of California, spending more than $140-million of her own money on an unsuccessful campaign.
HP’s new CEO seemed to apply some of the lessons from that campaign during her first meeting with analysts on Thursday. At least twice, she repeated the same slogan to explain why she accepted the job: “Because HP really matters. It matters to Silicon Valley, California, the U.S., and the world.”
In the near-term, it appears Ms. Whitman will not deviate significantly from Mr. Apotheker’s strategy. However she did issue a plea for a little more time than her hastily ousted predecessor got.
“This isn’t something we’re going to be able to do overnight, it takes time,” she said. “Evolving a company like HP is a long-term project.”
Hewlett-Packard Co. (HPQ-N). Close: $22.80 (U.S.), down 1.18