Meg Whitman Takes Over as CEO at HP

Jennifer LeClaire, <a href='http://www.newsfactor.com'>newsfactor.com</a>

With back-to-back poor quarterly earnings reports, Hewlett-Packard apparently isn't willing to give Leo Apotheker any more time to turn the company around. Apotheker, formerly the CEO at enterprise-software giant SAP, took the helm at HP about 10 months ago -- soon after the board fired its last CEO, Mark Hurd, amid allegations of misconduct.

Rumors swirled earlier today, with The New York Times citing anonymous sources saying Meg Whitman was the leading candidate to replace Apotheker. By mid-day, the rumors were confirmed, with HP issuing a formal announcement that Meg Whitman is stepping in as president and CEO. Whitman served as the CEO for eBay and currently sits on the board of directors at HP.

Rapid Fire Today's news makes Leo Apotheker the third CEO in a row that HP has fired, dating back to Carly Fiorina, followed by Mark Hurd.

Apotheker's moves over the course of his 10-month term have included putting the kibosh on the webOS operating system (software for which HP paid $1.2 billion) and acquiring Autonomy for $11.7 billion (which analysts insist was overpriced). Other recent milestones have included the failure of the TouchPad tablet, and the potential -- and very surprising -- spinoff of HP's PC business. HP stock has dipped nearly 50 percent since Apotheker took over.

"Apotheker was brought on board to orchestrate a major change in the company. He's only been there 10 months," said Rob Enderle, principal analyst at Enderle Group. "It would take at least two years for his changes to have effect. Anybody who thought changing HP from a hardware company to what is going to be largely a software company was going to be painless must have missed a few meetings."

With regard to rumors hitting the streets today before HP's formal announcement, Enderle speculated that someone from within the board may have been orchestrating a leak for their own reasons. It's not clear whether today's buzz about the change caused HP to issue an announcement sooner than originally planned.

HP's Most Serious Problem

Part of the problem with Apotheker, as the Times reported, has been his communication style. That stance is bolstered by a lawsuit filed against HP claiming execs misled investors about the company's state. But the company's biggest problem may be the reputation for board leaks.

"HP has an environment where leaks are apparently allowed and this practice has transitioned across board members. It's probably HP's most serious problem," Enderle said. "If they cannot contain the leaks, no CEO could be successful at running this company. Leaks create the impression that the board isn't behind its CEO, and it's very hard to get anything done when that's the case."

Past Success

Whitman, for her part, is used to the spotlight and HP is defending her as the latest choice for its top spot. She has held key executive positions at some of America's most well known brands, including Disney, Stride Rite, FTD and Hasbro. She is also credited with steering eBay through the dot-com rise and fall, and, avoiding the crash and burn that was the fate of so many of its contemporaries.

When Whitman joined eBay in 1998, it had 30 employees and $4.7 million in revenues. In 10 years, she grew the company to nearly $8 billion in revenues with 15,000 employees worldwide. Whitman later ran for governor of California and lost.