Meg Whitman Replaces Apotheker As CEO At HP

In a surprise development, HP has named former eBay CEO Meg Whitman to replace Leo Apotheker as president and CEO of Hewlett-Packard, based on disappointment in Apotheker's failure to execute on the company's new strategy. Whitman, who also ran for governor of California last year but lost, pledged support for HP's strategy of building its enterprise software business and making a decision by the end of the year on whether to spin off its Personal Systems Group (PSG), which sells desktop, laptop and tablet computers to consumers.

"HP really matters. It matters to Silicon Valley, to California, to the United States and frankly the entire world," Whitman said in a conference call with financial analysts and reporters. "HP will have no higher priority than to do everything in our power to meet the challenge of today's macro-economic environment and improve our operational and financial performance."

Ray Lane will assume the position of executive chairman of HP's board and explained on the conference call why Apotheker was replaced as president and CEO. Lane said that a company the size of HP--$128 billion in revenue and 320,000 employees--requires an executive team whose members are all on the same page, and that wasn't happening under Apotheker. Apotheker was previously CEO of enterprise software company SAP.

Secondly, Apotheker's execution of company strategy was poor, Lane said: "[Apotheker lacked] the ability to get deep down into the businesses and understand the dynamics that were going on and can land us on a quarter ahead of expectations."

Thirdly, communications broke down under Apotheker's tenure, Lane added, particularly surrounding an announcement HP made on Aug. 18 to study spinning off PSG, discontinue the failed HP TouchPad tablet computer and two smartphones after only a few months on the market, and acquire the enterprise information management software company Autonomy for $10 billion. "I look at Meg and her strongest attributes are leadership, team play, communications and operating execution," said Lane.

Whitman served as CEO of eBay from 1998 to 2007, and during her tenure built the company into an $8 billion Web auction site, one of the early successes of the e-commerce era. Although she stepped down as CEO in 2007, she stayed on the board for another year.

Whitman ran for governor of California as a Republican but lost to Democrat Jerry Brown in 2010. Coincidentally, one of her chief rivals for the Republican nomination was Carly Fiorina, who served as HP CEO from 1999 until she was forced out in 2005.

Fiorina was replaced by Mark Hurd, who was also forced to resign in 2010--in his case, for questionable expense reports for dinners with a woman who was a marketing contractor for HP. Whitman has also been on HP's board since January of this year. Lane said the company will appoint a lead independent director to its board "promptly." Apotheker also lost his board seat.

With Whitman in charge, executive chairman Lane has someone who can execute on HP's strategy in a way Apotheker couldn't, says Rob Enderle, principal analyst with the Enderle Group, a tech research firm. "Ray Lane had to bail him out," Enderle says of Apotheker. "Lane was basically the acting head of HP, and Apotheker was his executive vice president."

Now, Lane can give broad direction to Whitman about the company's strategy and she will execute it, Enderle says. And as a one-time politician, Whitman will be good at staying on message as a high-profile CEO.

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