More drama at Hewlett-Packard

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The most one can say for Leo Apotheker at this point is that he lasted longer at HP than he did at his prior gig at SAP. After less than eleven months on the job, the HP board sacked Mr. Apotheker stating that HP needed an executive who could execute on the details.  The fact of the matter the Apotheker reign, brief as it was saw several executions:

-the Web OS hardware and smart phone business, while making vague statements about doing something with the web os operating system.

– business confidence in the Personal Systems Groups’ ability to sell and support  personal computers and printers was executed by the pronouncement that HP was looking at either spinning off or selling the PSG.  Businesses put a hold on, or canceled outright, purchasing decisions and opened the door to inroads by Dell and Lenovo to take lucrative purchases from HP.

-the execution of the purchase of Autonomy, a UK software company for well over its market value. In fact this purchase was the cornerstone of Apothekers’ stated vision of turning HP away from hardware into a software and services group, much as IBM did in late 2004. However, IBM did not telegraph its intentions before a buyer was found and certainly did not tell industry analysis’s that they wanted to dump the business because it was not making the kind of profits HP wanted to see.

-finally, Mr. Apotheker  presided over the execution of over forty percent of HP’s share value.  When a publically traded company’s share value tumbles like that, shareholders want either a human sacrifice or new leadership.

Lest anyone accuse the HP Board of slipshod incompetence, the board quickly threw Leo out of the sled and to the wolves. Or so it appears. More on that later. The HP board them embarked on an exhaustive search for a new CEO. Provided that taking a quick look around the boardroom and noticing that board member Meg Whitman was not going to be governor of the US state of California after all and was at loose ends was exhausting.  In addition, ex-Oracle COO and non-executive chairman of the HP board, Ray Lane became the Executive Chairman of HP. In plain English, that means that Mr. Lane would become involved in day to day corporate decision making, rather than the broad oversight that most corporate boards exercise.

In subsequent interviews, it has quickly become apparent that Mr. Lane may well share at least equal power with Ms. Whitman.  Interviews and communications to HP staff have for the most part been of a joint nature and Ms. Whitman seems to be adopting more of a communicator role, while Mr. Lane does the heavy lifting as it were.  There may well be very good reasons for this. Ms. Whitman, former CEO of Ebay is widely seen as having little tech experience but a lot of consumer expertise.  HP desperately needs to develop a consistent message and execute on it.  This may be the board’s answer.

As for the timing of the termination of Mr. Apotheker, apparently Mr. Lane has admitted in interviews that the wheels for that decision started turning over eight months ago. Which raises the question, which has been asked quite often, what kind of vetting process was used to hire Leo in the first place? According to the New York Times, not much as it was reported that most of the board voted to hire Mr. Apotheker without ac tually meeting him. Since the gentleman in question was terminated after a bare seven months as CEO of SAP, reasonable people would think that a personal meeting was in order. Of course, Mr. Lane is quick to point out that this is not the same board that hired Apotheker, that there have been eight board members replaced since that decision was taken, including Mr. Lane and Ms. Whitman to name two.

What does all this mean for HP? First, innovation is going to suffer, as anyone who can is going to be looking for more stable pastures. Second, it is by no means certain that HP’s personal hardware business will be able to recover from the doubt and uncertainty.   Finally, there is an excellent chance that if things do not turn around fairly quickly at HP, Ms. Whitman may be the next one to walk the plank.

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