HP Said to Be Preparing to Name Whitman Permanent CEO Today
Hewlett-Packard Co. (HPQ) is preparing to name former EBay Inc. (EBAY) Chief Executive Officer Meg Whitman as its next CEO today, ousting Leo Apotheker after less than 11 months, according to two people with knowledge of the matter.
The board, which is meeting today, is expected to make Whitman its permanent CEO, countering reports that she was being considered as an interim leader, said one of the people, who asked not to be named because the talks are private.
Apotheker, who became CEO in November, rankled investors by lowering sales forecasts three times and making jarring strategy shifts. Before yesterday, when Bloomberg reported that he may be fired, the company’s stock had plunged 47 percent on his watch. “Investor exasperation” with management is at its highest in more than a decade, according to Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co.
“There’s certainly a lot of investor discontent,” Amit Daryanani, an analyst at RBC Capital Markets in San Francisco, said yesterday. He rates the shares “sector perform” and doesn’t own them. “There’s widespread frustration with the fact that numbers have been cut three times since he’s been there.”
Hewlett-Packard fell $1.27, or 5.3 percent, to $22.71 at 2:21 p.m. on the New York Stock Exchange.
As of yesterday morning, Apotheker was preparing to discuss Hewlett-Packard’s strategy at today’s board meeting and didn’t know his standing as CEO was being questioned, according to a person close to the situation.
The AllThingsD blog previously reported that Whitman would be named CEO today. Michael Thacker, a spokeswoman for Palo Alto, California-based Hewlett-Packard, declined to comment.
Whitman, 55, joined Hewlett-Packard’s board in January after a failed bid to become California’s governor last year. She had a mixed record at EBay. CEO for a decade, she took the company public and pioneered e-commerce for small businesses. Yet in the final years of her tenure, she couldn’t halt a slowdown in sales growth and overpaid for Skype Technologies SA after a bidding war with Google Inc. and Yahoo! Inc.
Before EBay, Whitman worked as an executive at the toy company Hasbro Inc., the floral service FTD Inc., footwear maker Stride Rite Corp. and Walt Disney Co. (DIS)
For Hewlett-Packard, which is increasingly focused on selling to businesses, Whitman is probably not the right person for the long term, said Dana Stalder, a partner at venture- capital firm Matrix Partners in Palo Alto, California.
The Right Person?
“It’s not clear to me that someone who spent 30 years in the consumer space is the right person for an enterprise technology company,” said Stalder, who worked under Whitman for seven years at EBay. “HP is increasingly becoming an enterprise company, given the focus on enterprise software and services.”
Whitman also hasn’t run a company of Hewlett-Packard’s size. It had revenue of more than $126 billion in the past fiscal year, almost 14 times the size of EBay’s sales.
“She’s on the board and is a logical interim CEO, but not a logical long-term CEO,” said Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco. He who has a “neutral” rating on the stock. “She doesn’t have enterprise experience.”
Pressure on Apotheker intensified on Aug. 18, when he announced a sweeping overhaul that included a $10.3 billion acquisition of Autonomy Corp. and a possible spinoff of the personal-computer business. He also killed off the company’s WebOS tablets and smartphones, five months after vowing to put the operating system on a full range of the company’s computers.
The shares plunged 20 percent following the announcement, fueled by concerns that Autonomy was too expensive and the plans showed a lack of deliberation.
Hewlett-Packard directors met yesterday in committees and are gathering today as a full board, according to a person close to the situation. Directors are concerned about the stock price and its lack of improvement under Apotheker’s leadership, the person said. Some top Hewlett-Packard executives also opposed the acquisition of Autonomy, a deal pushed by Apotheker, according to the person.
Hewlett-Packard’s board also is open to re-examining the PC split business because some directors think the idea wasn’t studied as thoroughly as other spinoffs, such as one by Kraft Foods Inc. (KFT), a person familiar with the discussion said.
The possible spinoff would take as long as 18 months to complete, Hewlett-Packard said at the time. That elicited criticism that it should have had a buyer lined up or a more concrete plan in place before making the announcement.
Apotheker stands to receive a minimum payout of $7.2 million, according to a copy of his employment contract filed with the U.S. Securities and Exchange Commission. He would also have some stock options that vest, in full, as of the termination date.
Dominique Senequier, a board member, also plans to leave the company. Hewlett-Packard disclosed her departure in a Sept. 9 filing, without making a separate announcement. Senequier, who is CEO of AXA Private Equity, the investment buyout arm of French insurer AXA SA, plans to leave after the annual meeting set for March.
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