“The Board believes that the job of the HP CEO now requires additional attributes to successfully execute on the company’s strategy,” said Ray Lane, who has been promoted as the executive Chairman of the Board. Earlier, Ray Lane was an independent, non-executive chairman of the computer company.
According to Bloomberg, ever since Apotheker took over as CEO in November, the company’s stock price decreased by 47% , showing the lack of trust shareholders had in his leadership.
Before leading HP, Apotheker headed European software giant SAP, whereas HP’s software business accounts for around 2% of the company’s annual revenue. Leaning on his knowledge and experience of leading a software company, Apotheker decided to refocus HP on businesses with higher margins like cloud computing and software. He was specially optimistic about HP’s acquisition of Palm, whose webOS software, he planned to introduce in HP’s various hardwa
re lines, including PCs, phones and the TouchPad tablet
However, Apotheker’s plans went awry. His company’s phones were not registering sales, the TouchPad business did not take off, and, PC sales witnessed a global slump. Stung, the CEO announced another surprising move, last month. He decided to end the webOS experiment and said that HP would get out of the PC business in entirety, a line in which it is a market leader both in the US and globally.
Lane believes, the problem was not Apotheker’s lack of vision but a lack of execution and communication. “Meg Whitman has the right operational and communication skills and leadership abilities to deliver improved execution and financial performance,” he said.
Whitman on her part says that she will focus on making the company’s strategy work while also taking on customer challenges. Acknowledging that HP had disappointed investors in recent times, she said, “Going forward, HP will have no higher priority than to do everything in our power to meet the challenges of today’s macroeconomic environment, and, frankly improve our operational and financial performance.”
Whitman guided eBay for 10 years, taking over as its head in 1998 when the company was still in its infancy. By 2008, when she quit, the online auction site had grown to a $ 8.5 billion giant.
In 2010, Whitman was the Republican nominee in the California gubernatorial race, which she did not win. In January she was nominated to the HP Board.
HP has been an ill-fated company for the last ten years and has had seven CEOs since 1999. The last CEO to be fired was Mark Hurd in 2010, over an alleged sexual misconduct and submission of false expense reports.
In 2006,chairwoman Pattie Dunn was fired after it came to light that she had initiated a secret probe to spy on fellow board members and journalists to discover the source of board-level leaks to the media.
A year before, in 2005, then-CEO Carly Fiorina had to quit after spearheading HP’s failed merger with Compaq. To boot, the company’s stock price reduced to half of its value during her tenure.
The high CEO turnover rate has cost the company in financial terms as well. HP has had to pay more than $ 83 million in severance pay, including the $ 25 million plus, which it owes to Apotheker.
Though Lane and the HP board is convinced that Whitman is the right fit for the HP CEO position, there are few who are not so sure.
Vanessa Alvarez, analyst at Forrester Research put it bluntly when she said, “As if HP didn’t make a mistake on bringing in Leo Apotheker, now they are making an even bigger mistake by bringing in Meg Whitman, someone with very little experience in the core areas of HP. This is plain carelessness by the board, and quite frankly, hammering the last nail in the coffin for HP. It’s leadership is gutter. I’m appalled.”
However, Whitman was optimistic when she took over the post. “I am honored and excited to lead HP, I believe HP matters — it matters to Silicon Valley, California, the country and the world,” she said.
Let us hope that Meg Whitman matters to HP, in the long run.