Nice Knowin' Ya: HP Board Meeting to Consider Replacing CEO Apotheker

Yup, that was quick, even by Silicon Valley standards. Hard to tell which is spinning faster, the HP CEO merry-go-round or the shades of David Packard and Bill Hewlett. The company they built on respect for the employee and managing for the long term seems to have gone the way of...what? The dinosaur? The employee pension? Whatever.

The larger problem from the standpoint of investors, customers and suppliers is, in fact, this company's board of directors. The CEO succession process has been like free microphone night at a comedy club. Carly Fiorina, Mark Hurd and now Leo Apotheker. Tens of millions in shareholder wealth is being destroyed, thousands have lost their jobs and one still wonders who is in charge. Observers may joke about where the responsible adults are at Google or Facebook, but compared to HP over the past few years, they are looking positively grown up. This is not as much a CEO problem as a governance problem. It needs to get fixed.

Oh, and by the way; the reason for the Meg Whitman pic? Guess which HP board member is being touted as the next CEO? JL

Joseph Menn reports in the Financial Times:

Hewlett-Packard shares jumped 9 per cent in midday trading on Wednesday ahead of a board meeting at which the largest computer by revenue was expected to consider replacing chief executive Léo Apotheker after less than a year in the job.

One person close to the decision-making process said the directors were “likely” to opt to replace Mr Apotheker with Meg Whitman, the former chief executive of Ebay and an HP board member. The person said the board would not be voting on a contract yet.

HP declined to comment, and Mr Apotheker did not respond immediately to questions. Bloomberg had reported that Ms Whitman was in the frame for the job earlier in the day.

The reports follow Mr Apotheker’s announcement last month of a dramatic acceleration in his push to make HP more of a big-business software company and less dependent on commoditised hardware. The company said it would buy Autonomy, the UK software group, for $10.3bn and explore spinning off HP’s personal computer business, which is the world’s biggest by sales.

Even as Mr Apotheker said that a trend toward tablet computing led by Apple was irreversible, he also shuttered HP’s answer to the iPad, the TouchPad, after just two months of sales.

The announcement of so many big moves at once left many investors deeply concerned that HP was floundering. The Silicon Valley company had also reduced its financial projections for the third time in the year since hiring Mr Apotheker, a former head of business at software group SAP. Investors sent HP shares down by 25 per cent in the 24 hours after the Autonomy deal was announced.

“He is like an organ transplant that didn’t take,” the person said of Mr Apotheker.

Mr Apotheker was more popular among employees than his cost-cutting predecessor, Mark Hurd, and many analysts agreed that HP needed to move further into the more profitable software and services lines.

But Kathryn Huberty, analyst at Morgan Stanley, warned in August that the acquisition and spin-off plans were “coming from a position of weakness rather than strength”, questioning “the ability of management to execute divestitures while integrating a large deal and managing deteriorating fundamentals”.

Even after the surge on Wednesday, HP stock is trading at half the level it was in February. The board has come under criticism by shareholders for years, especially after ousting Mr Apotheker’s predecessor Mark Hurd, who was well regarded on Wall Street.

Ms Whitman recently lost a bid to become governor of California. She could not immediately be reached for comment.