HP (NYSE: HPQ) capped off a surreal month during which it put its PC group on ice and shelved its tablet hardware group by firing CEO Leo Apotheker and replacing him after less than a year on the job with Meg Whitman, the former eBay (NSDQ: EBAY) CEO, current member of HP’s board of directors, and failed Republican candidate for governor of California. The company said Apotheker resigned, but it’s quite clear he was pushed out after proposing a strategy–approved by the same board–of refocusing HP on enterprise software and services and moving away from personal computing that investors did not like.
“The board believes that the job of the HP CEO now requires additional attributes to successfully execute on the company’s strategy. Meg Whitman has the right operational and communication skills and leadership abilities to deliver improved execution and financial performance,” said HP’s Ray Lane, who will now become chairman of the board of directors, in a press release announcing the move. Apotheker was CEO of German enterprise software company SAP before taking on the HP job following the dismissal of Mark Hurd.
It’s not quite clear what will happen next: whether Whitman will disavow the restructuring strategy outlined by Apotheker a month ago on HP’s earnings conference call or whether the board just felt she was better equipped to handle such a transition. HP scheduled a conference call for 2pm PT to discuss the announcement.
Update: On the conference call, Lane reiterated that the board’s decision to change CEOs after less than a year with Apotheker was “a difficult decision,” but that it was forced to consider the idea after observing “weaknesses in parts of the business” that pointed to the need for new leadership.
But even if Apotheker was lacking when it came to “operating execution” (Lane’s words), it sounds like HP will be sticking to his strategy for turning the company around, for now at least. That makes sense: if Whitman, who was board member, had come out today striking down everything Apotheker had laid out, that would have just undermined the board’s position and credibility even more. All the same, she will need to assert herself as a leader different to him:
“I am supportive of the things that were announced August 18, but now that I am CEO, I will be deeply involved in guidance in 2012, will review the strategic initaitves and will surface in my point of view on this,” she said. “I will step back and take a hard look, but from what I know now, the strategy is right.”
Specifically, Whitman noted that HP will try to come to a conclusion about its PSG group as soon as possible. “It’s not like fine wine, it’s not going to get better with age,” she said. No word for now on reversing the decision to discontinue the TouchPad, Pre and Veer wireless products; similarly, HP will continue to “explore options for optimising WebOS software.”
Investor confidence: Whitman admitted that she and the HP board will have a lot of work to do in getting investors back on side. Lane spent some time on the call defending the current board — five new members were appointed in January, said Lane. “This is not the board that was involved with [ex-CEO] Hurd and all the things the press likes to write about.”
And he also spent time defending the decision to make what seemed like a quick internal appointment, rather than hiring an interim head and conducting an outside search.
One analyst put it well when he noted that the decision to put Whitman, a board member for the last eight months, at the helm of the company “feels more reactive than proactive.”
“HP has disappointed investors…we’re not happy about it,” said Whitman. “We will take the steps to get HP back on track.” Nevertheless, CFO Cathie Lesjak came on the call briefly to note that after the mixed results from its last earnings call, the company remains cautious on its Q4 outlook.