HP Removes CEO Apotheker, Whitman Named Replacement

Earlier reports proved true: HP has changed CEOs yet again.

Hewlett-Packard Co. made it official today: it fired president and CEO Leo Apotheker and named former eBayer Meg Whitman as his successor. The move was expected (see yesterday's ESJ Newsire story).

The decision to fire Apotheker comes less than a year after he was hired by the company to replace Mark Hurd, who had been fired over expense report irregularities. Hp says Hurd also covered up an inappropriate relationship with a contract employee.

Apotheker's departure comes amid questions, confusion, and concerns over recent company announcements, including the company's hasty disclosure that it is considering the sale or spinoff of its PC business and withdrawing from the tablet and mobile phone market. HP simultaneously announced the $10.3 billion acquisition of enterprise search vendor Autonomy, a move that many critics are questioning because of the deal's high price tag.

It didn't help that HP's revenues have declined over the last three quarters and its market valuation has fallen by nearly half since he took over last November.

Ray Lane, who was HP's non-executive chairman, was named executive chairman. During a Webcast for investors, Lane explained there were several reasons HP had to oust Apotheker. Among them was a lack of confidence in Apotheker's leadership because he and members of his executive team weren't in sync. "We didn't see an executive team that was working on the same page or working together," Lane said.

An inability to communicate well to employees, investors, partners, and customers also plagued Apotheker, as evidenced by his handling of the Aug. 18 announcements of HP's plan to evaluate divesting its PC business, the discontinuation of its webOS-based device business and the Autonomy deal. However, perhaps his biggest failing, according to Lane, was operating and financial execution.

"We're fortunate to have someone of Meg's caliber and experience to step up and lead HP," Lane said. Whitman, who unsuccessfully ran for governor of California last year, joined HP's board back in January.

The criticism of Apotheker appeared to come more from his inability to communicate HP's strategy than the strategy itself. On the investor call, Whitman said while she will review the strategy, she is on board with it.

"I will step back and take a hard look at this, but from what I know now, I think the strategy is right, the initiatives that we undertook on Aug. 18 are right, and I'll dive in and have a more informed point of view for you, probably at our next earnings call," Whitman said.

It remains to be seen whether she is up to the task of turning HP around. Whitman's background is primarily consumer-based, having worked at such companies as Walt Disney Co., FTD and Stride Rite. She has no enterprise background or experience running a hardware business.

Furthermore, though Whitman saw eBay through 10 years of huge growth, the company is still dwarfed in size and scale by HP. She also made some questionable moves, including eBay's $2.5 billion purchase of Skype, which the company years later wrote off.

Whitman explained that "the way we have to rebuild the confidence of investors, the confidence of employees, is we have to execute.  We have to say what we're going to do, we have to mean it, and we have to deliver the results. In the end, the only thing that will rebuild confidence in this company is delivering the results, and that's what I intend to do."

Analysts questioned why the board didn't conduct an exhaustive search both inside and outside of HP. Lane said he believed Whitman was the best candidate.

"I knew from the beginning of the process that she is the strongest candidate to do this," he said. "I've seen Meg lead. She is decisive, she is a people person. I predict that the HP employees are going to get on her side because she is going to get on their side really, really quickly."

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.