09.22.11 3:13 PM ET
Meg Whitman Named HP CEO
HP Confirms Whitman is In
Hewlett-Packard confirmed Thursday that, as rumored, Meg Whitman will be the company's next CEO. HP ousted CEO Leo Apotheker after just 11 months on the job. Apotheker, formerly the CEO of the European software company SAP, was widely seen as a strange choice for HP, which is primarily a hardware company. Whitman, who lost a high-profile gubernatorial bid in California last year, rose to national name-recognition as the CEO of eBay.
Another HP CEO on the Way Out
Hewlett-Packard’s board met yesterday to discuss ousting CEO Leo Apotheker after only 11 months on the job. They’re meeting again today, but a decision might not be made until Friday, sources tell All Things Digital. (Update: The New York Times and Reuters also cite unnamed sources with the same information.) Still, his departure looks increasingly likely given his rocky tenure, which has seen disappointing earnings, plummeting stock prices, and questionable strategic decisions.
Though no official word has leaked, sources tell All Things Digital that former eBay chief and California gubernatorial candidate Meg Whitman is all but certain to take over the top spot—and not on an interim basis, either. Whitman has recently rehired trusted communications guru Henry Gomez, which points to big news ahead. All Things Digital’s sources said the announcement would likely come after the close of markets on Thursday.
Why Is Apotheker Under Fire?
HP’s market value was nearly halved during Apotheker’s short tenure, partly the result of rapid changes in strategy that alarmed investors. Last month, Apotheker announced a radical plan to split off the $40 billion-a-year personal-computer business and spend $10.3 billion to acquire the software company Autonomy Corp. The board approved the plan, but investors didn’t like it, and HP’s stock fell 20 percent. Apotheker also canceled webOS, the company’s mobile-operating system, as well as its line of tablets and smartphones, after only six weeks on the market.
But the larger question might not be why Apotheker is on the way out but why he was hired in the first place. His background was in software, not hardware, and he didn’t have a stellar track record as head of German business-software supplier SAP.
HP’s Dysfunctional Board
The explanation for Apotheker’s mysterious hiring and sudden ousting may lie with HP’s board. The HP board was apparently so rife with bickering and infighting over the ouster of previous chief Mark Hurd that hardly any members bothered to meet Apotheker before appointing him. After several of the board’s top picks turned them down, the search committee narrowed the field to three candidates, including Apotheker. An internal candidate was deemed unready, and the CEO of Sun Microsystems was seen as too outspoken, so they chose Apotheker. “Among the finalists, he was the best of a very unattractive group,” one director told The New York Times. One member recalls raising the concern, “No one has ever met him. Are we sure?” But she was brushed aside.
HP’s board has a history of summarily dismissing its CEOs—Apotheker would be the third in six years. The board was criticized for the way it booted his predecessor, Hurd, for a personal relationship with a contractor, as well as for its dismissal of former CEO Carly Fiorina in 2005 amid boardroom squabbles. Add to this the proxy wars between the board and the founders’ children over the merger with Compaq and scandals over spying on journalists, employees, and other board members, and it starts to look as if the HP board may be to blame for the company’s troubles.
What Happens Next?
Despite the rumors, Whitman has not offered any public comments on whether she is up for the job, or if she would take it if offered. It’s also unclear whether HP would—or could—reverse Apotheker’s decisions. The Autonomy deal is done, and HP is contractually obliged to go through with it. Apotheker himself will get a sizable severance package, according to The Wall Street Journal: $35 million for his 11 months of work.