Bloomberg.com: HP CEO to be fired soon

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HP Board Said to Weigh Ousting CEO Apotheker

Hewlett-Packard Co. (HPQ), facing investor frustration over sales-forecast cuts and jarring strategy shifts, is considering replacing Chief Executive Officer Leo Apotheker, two people familiar with the matter said.

The board may appoint Hewlett-Packard director and former EBay Inc. (EBAY) CEO Meg Whitman as Apotheker’s successor, possibly on an interim basis, said one of the people, who asked not to be named because the plans aren’t public. The board also is reconsidering a proposal to spin off the company’s personal- computer unit, another person said.

Hewlett-Packard has lowered its sales forecasts three times since Apotheker became CEO in November, and he’s presided over strategy swings that left shareholders doubting his credibility. Before today, the company’s stock has plunged 47 percent on his watch, and “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 with them,” said Amit Daryanani, an analyst at RBC Capital Markets in San Francisco, who 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 rose $1.51, or 6.7 percent, to $23.98 today on the New York Stock Exchange after Bloomberg reported the possible management change.
Revisiting the Spinoff

Hewlett-Packard’s board, due to meet this week, is open to re-examining the spinoff proposal now because some directors think the idea wasn’t studied as thoroughly as other high- profile spinoffs, such as one by Kraft Foods Inc. (KFT), the person familiar with the matter said. At the same time, the turmoil raises the possibility that some or all of Hewlett-Packard may become a takeover candidate.

Mylene Mangalindan, a spokeswoman for Palo Alto, California-based Hewlett-Packard, declined to comment.

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.

Whitman, who joined Hewlett-Packard’s board in January after a failed bid to become California’s governor last year, 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.

Not Long-Term?

Her lack of experience in computing for large companies may mean she doesn’t stay in the role for long, said Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco.

“She’s on the board and is a logical interim CEO, but not a logical long-term CEO,” said Noland, 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 the possible PC spinoff. He also killed off the company’s WebOS tablets and smartphones, just 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. The stock slumped to the point that other breakup and takeover scenarios are possible, Hewlett- Packard investor Michael Mullaney said at the time.
‘Scoop It Up’

“For the right company, it probably would make sense for someone to come in and scoop it up,” Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston, said in August. “Someone could come and at least buy pieces of the firm.”

The server unit would boost Oracle Corp.’s share fivefold and help it become the biggest maker of the hardware. Hewlett- Packard’s printer business, which is 70 percent more profitable than the company as a whole, may also attract private-equity firms, Mullaney said.

While the PC spinoff would help Hewlett-Packard focus on higher-margin products, such as services and software, the way it was conveyed didn’t satisfy shareholders, Sacconaghi said. The Autonomy deal, meanwhile, hasn’t been popular, he said.

“Our conversations with investors continue to point to near universal opposition of the Autonomy acquisition, due to its high price,” he wrote in a Sept. 13 report.
Undoing Autonomy

By paying cash for Autonomy, Hewlett-Packard doesn’t need approval from its own shareholders to complete the deal, Sacconaghi said.

The company can’t undo the takeover unless Autonomy investors fail to approve it, according to a person with knowledge of the terms. That outcome is unlikely, given that 42 percent of Autonomy shares had already been tendered in favor of the sale as of Sept. 12, this person said.

Apotheker, the former CEO of German software maker SAP AG (SAP), has aimed to transform Hewlett-Packard into a provider of more profitable software and services for businesses that are doing more computing on remote servers, via the so-called cloud. Yet, results have been plagued by tepid demand for PCs, as consumers in growing numbers snapped up competing mobile devices and tablets, such as Apple Inc.’s iPad.
Short Stint

His tenure at Hewlett-Packard may barely outlast his 10- month stint as CEO of SAP. He resigned in February 2010 after an attempted price increase during the recession that rankled consumers and a clash with German unions on plans to cut jobs. He presided over the company’s first revenue decline since 2003 as customers delayed software purchases.

Apotheker joined Hewlett-Packard after Mark Hurd departed as CEO amid a scandal over a personal relationship with a company contractor. Hurd now is a co-president at Oracle.

Hewlett-Packard isn’t looking to completely change course, said Baird’s Noland. The company’s board and shareholders are mostly looking for a surer hand, he said.

“The board is directionally behind the plan Apotheker’s put in place,” Noland said. “It’s just the execution of that plan that has investors wound up.”
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http://www.bloomberg.com/news/2011-...ng-apotheker-after-less-than-year-as-ceo.html
 
Let's say you were given a year to kill Hewlett-Packard. Here's how you do it:

Fire well-performing CEO Mark Hurd over expense-report irregularities and a juicy sexual-harassment claim that you admit has no merit. Fire four board members, as publicly as possible. Foment a mass exodus of key executives who actually know how to run the giant computer company.

Hire new a CEO from German competitor, SAP, which sells business software, not consumer products. Tell the new CEO, Leo Apotheker, that Mr. Hurd "left H-P in great shape."

Draw public criticism from a major corporate-governance advisory firm, alleging Mr. Apotheker filled board openings with cronies.

Pursue pricey mergers and stock buybacks. Allow expenses to run out of control. Try to blow through billions of dollars in cash reserves before the next global economic slowdown.

Provoke partners Microsoft and Oracle by threatening to put H-P's own operating software on PCs. Then decide not to. Remember that promising webOS software H-P bought in a $1.2 billion acquisition of Palm last year? Sideline it.

Bristle when Oracle's Larry Ellison tells the New York Times: "The H-P board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs." And file lawsuits when Mr. Ellison hires Mr. Hurd.

Boast that you're going to attack Apple's iPad with your $499 TouchPad. Then dump your TouchPad in a $99 fire sale and announce you're just not going to offer it anymore.

Telegraph to the world that you are just too dumb to make smartphones.

Raise your financial estimates, twice. Then miss them, twice.

Make sure Mr. Apotheker's memo gets leaked to the media -- the one that says "watch every penny and minimize all hiring."

Announce plans to buy British business software company Autonomy for $10 billion, because it makes enterprise software just like SAP, which is what Mr. Apotheker knows best.

Announce plans to maybe sell the PC business. Or maybe spin off PCs as a stand-alone company. Uncertainty will damage the price.

Never mind the years of effort H-P spent -- including a controversial merger with Compaq -- becoming the world's largest PC maker. Never mind that the PC business feeds H-P's more profitable businesses. Dumping it is a beautiful absurdity that one analyst, Jayson Noland of Robert W. Baird & Co., described as "like McDonald's getting out of the hamburger business."

Watch Moody's threaten to downgrade H-P's credit.

Act surprised as H-P's stock plunges more than 40%.

Go to Wall Street and tell long, confusing stories about how you are transforming H-P from a low-margin to a high-margin business.
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Operations said:
Not even willing to let him put his new strategy to the test?
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What was his new strategy. To be honest with you, I am starting to dislike HP more and more as they days goes by and they need to have a an instant and a practical shift in strategy.
 
things are definitely getting interesting at work with us hearing about this as well as some other news going around. Surprised that hasn't leaked out yet...

I have no idea what we are doing, but I hope someone starts to steer the ship straight again.
 
HP is like a ship with a hole in the bottom, leaking water, and my job is to get the ship pointed in the right direction.
 
This shift was just so fucking stupid. HP should have made some quality mobile products at good prices and stuck to their vision of being the Apple alternative. That was ambitious and possible. Instead they make all these dumbass decision.

There was no need for this.
 
They should never have purchased Palm, that was a stupid move, and it was on Hurd's watch. Apotheker was doomed from the start.
 
I mean this in the most respectful way, but will a female CEO really save HP? I don't mean to stereotype, but how often has that proven successful for a technology company?

It's a shame that Hurd made a dumb mistake. It's an even bigger shame that the world gets so bent out of shape by one person's actions that we are ok with making a decision that would affect the LIVELIHOOD of hundreds of thousands of people.
 
Captain Sparrow said:
I mean this in the most respectful way, but will a female CEO really save HP? I don't mean to stereotype, but how often has that proven successful?

It's a shame that Hurd made a dumb mistake. It's an even bigger shame that the world gets so bent out of shape by one person's actions that we are ok with making a decision that would affect the LIVELIHOOD of hundreds of thousands of people.
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Yes it's well-known that females can't run a company.

I have nothing against female CEOs, I just have no faith in Meg Whitman.
 
Captain Sparrow said:
I mean this in the most respectful way, but will a female CEO really save HP? I don't mean to stereotype, but how often has that proven successful?
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If this keeps up, soon there won't be anyone to make computers except for Apple. Maybe Samsung (Apple Lite). >_>
 
People were leaving in droves when Hurd was in charge. As for whether that was a needed shakeup or he was just bleeding HP dry for short term gains, that's another debate.

Plus if they do fire him now, who are the clowns that are sitting on the board to let this happen in the first place?
 
So my theory is that HP fucked themselves when they fired Hurd, which resulted in a loss of a billion dollars on palm a billion on the palm products and tens of millions to get rid of apoc as the current ceo. I have to say HP way to fuck your selves.
 
Noshino said:
And they didnt even leave in good terms.


Hurd was doing such an amazing job with the company.
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0_0

He was doing an amazing job for the stockholders...as far as employees...no, not at all. I don't believe anyone has seen a raise in the past 6-8 years.
 
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