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Whitman Replaces Apotheker at HP

(Updates with additional quotes and comment)

September 22, 2011 -- HP's board of directors has announced that onetime eBay CEO and California gubernatorial candidate Meg Whitman has replaced Leo Apotheker as president and chief executive officer of the hardware giant.

Also, Ray Lane is moving from a non-executive role to become the executive chairman of HP's board of directors. Lane said HP "is at a critical moment and needs renewed leadership" to meet a market strategy that was not much clarified in a Thursday press conference.

Lane said said the board decided that the CEO job required "additional attributes" to what departing CEO Leo Apotheker brought to the job. But Whitman affirmed Apotheker's earlier plans, which would have echoed the board's, to go ahead with a spinoff of HP's PSG personal computing business and to halt HP's fledgling TouchPad and smartphone businesses. Whitman joined HP's board of directors earlier this year.

The appointment makes her the third CEO to lead HP in less than a year. Whitman said evolving HP will be a long-term project but was confident she could build a strong foundation for the future. "The best thing we can do is get to a decision on PSG as fast as possible,"Whitman said. It's not like fine wine, it's not gonna get better with age."

Despite that, she vowed the company would continue to invest in storage, servers, printers, networking, PCs, software and service offerings.

As the evaluation of PSG continues, Whitman said HP will continue to pursue a "leadership position" in structured and unstructured data based on the Autonomy acquisition and an earlier deal that brought database specialist Vertica to HP.

HP appeared to be in disarray after Apotheker announced last month that the company was considering a spinoff of PSG and abandoning tablet devices to move into new business opportunities in information management of structured and unstructured information. He also announced that HP would be acquiring U.K.-based content management provider Autonomy for $10 billion, which some analysts considered a steep price.
In the absence of a clear follow up to that announcement, some analysts expected HP to retrace those steps and reconsider. Lane, however, reiterated the core bits of Apotheker's announcement, but insisted HP was not going through a "transformation."

Autonomy and unstructured data could become "a four or five or hopefully a $10 billion business but that does not mean we are transforming," Lane said, "and that word [transforming] has been stricken from our language." 

Lane said the current board of directors that released former chairman Mark Hurd and brought in Apotheker was a different group than the one today. He added that bringing in Whitman as a permanent replacement was an opportunity that the board needed to seize. "If we thought there was a better choice on the outside, we would have conducted a search," Lane said.

Added Whitman, "the only way to bring back investor confidence is to execute, and that's what I intend to do."

Lane declined to answer a question detailing the process that led to Apotheker's dismissal and the hiring of Whitman. 

Mark Smith, head analyst at Ventana Research, says Apotheker had difficulty translating wild swings in messaging from HP – with a big data appliance acquisition in February, cloud the next month and then virtualization and mobility shifts two months later – to results for investors.

He sees the brevity of Apotheker’s stay as a reaction to market pressures on HP’s software revenues as well as a lack of clear branding of the revenue-leading vendor, particularly with the uncertainty and price tag of the deal for Autonomy.

“If you jerk a company too far to one side or the other, you end up creating a lot of friction and people opposed to these transformational changes,” Smith says. “With something this dramatic, I would say that everything’s on the table as far as direction and strategy.”

Smith added that news of Whitman’s new role should make investors and customers particularly weary as the next few months reveal “what the heck this company is going to be.”

Forrester Research analyst Boris Evelson, who specializes in business intelligence and analytics, says he gauged Apotheker’s initial leadership as a boon to the vendor’s presence in those segments. With Whitman at the helm, Evelson fears that the people Apotheker brought over for their BI and analytics acumen may jump ship, and take HP’s headway in those areas with them.

“I thought that pace would accelerate with Apotheker because of his days with SAP and the BusinessObjects acquisition,” Evelson says. “In this particular segment of BI and analytics, I have no clue what Meg Whitman knows about BI. Coming from eBay, probably not much, so I think this is kind of a step back.”

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