HP may give CEO post to Whitman
Meg Whitman, the former EBay Inc. chief executive who made an unsuccessful California gubernatorial bid, is again causing a buzz on Wall Street.
Shares of Hewlett-Packard Co. surged Wednesday after investors rallied around reports that the computer giant was considering ousting beleaguered Chief Executive Leo Apotheker and replacing him with Whitman, at least temporarily.
Whitman, who is a director on HP’s board, has stayed largely under the public radar since her loss to Gov. Jerry Brown last year in a race on which she spent more than $150 million -- most of it out of her own pocket.
However, she has stayed active in Silicon Valley technology circles through her advisory roles at HP and at prominent venture investment firm Kleiner Perkins Caufield & Byers.
The prospect of a leadership change sent HP shares up $1.51, or 6.7%, to $23.98, the largest one-day rise since the Palo Alto company announced a month ago that it would undergo a major restructuring, including exploring the possibility of divesting its personal computer business, the world’s largest.
Since those plans were announced, HP’s stock price had plummeted more than 30% as of Tuesday’s stock market close, with Apotheker receiving the brunt of the blame from investors.
“The board just needs to act in the best interest of shareholders and get the leadership in order,” said Jeffrey Fidacara of Susquehanna Financial Group. “There are too many loose ends here that lead to uncertainty, and uncertainty leads to a lower stock price.”
Spokesmen for Whitman and HP declined to comment on the reports of the possible shake-up.
But analysts said Whitman’s 10 years of experience at EBay were seen both as an asset and a liability. Whitman took over the online auction company in 1998 when it had 30 employees, and by 2007 had turned it into a tech titan, with $8 billion in annual revenue.
But EBay’s growth slowed toward the end of her tenure, and several buyouts she orchestrated -- like EBay’s $3.1-billion purchase of Skype in 2005 -- flopped.
Still, given Whitman’s resume, the possibility of her appointment “made sense” for HP for the time being, Fidacara said. That would be especially true if she had the backing of Cathie Lesjak, HP’s chief operating officer and former interim CEO, who guided the company through the loss of its previous chief executive.
Over the last decade, the Silicon Valley electronics maker has had trouble avoiding turbulence at its highest levels.
In 2005 HP’s board fired Carly Fiorina, who like Whitman ran unsuccessfully for political office. Fiorina was blamed for backing a controversial deal to buy Compaq, a move that made HP the largest computer maker but failed to bring the returns hoped for by investors.
Last year HP’s board forced out Apotheker’s predecessor, Mark V. Hurd, amid sexual harassment allegations, a drama that was preceded by a headline-grabbing scandal in which executives were accused of spying on board members and journalists.
But Hurd, unlike Apotheker, was well liked by investors for having delivered consistent revenue and profit growth during his five-year tenure. Apotheker, meanwhile, has presided over HP’s lowest stock price in six years, and the company has forecast weaker sales in each of the last three quarters.
Apotheker’s dramatic reorganization included shutting down HP’s smartphone and tablet computer businesses, removing HP from one of the fastest-growing consumer technology sectors today.
Apotheker also took heat for his August decision to buy British software maker Autonomy Corp. for more than $10 billion in an effort to gain a stronger footing in the blossoming corporate software market.
Apotheker’s moves to pilot HP out of the computer-making business come as global PC sales slow, a trend that many analysts believe will continue indefinitely as more consumers turn to smartphones and tablets.
Many investors have not been happy with Apotheker’s aggressive approach to reinventing HP.
“Our conversations with investors continue to point to near-universal opposition of the Autonomy acquisition, due to its high price,” analyst Toni Sacconaghi of Sanford C. Bernstein & Co. wrote last week.
Also last week, an HP investor filed a class-action securities lawsuit against the firm in federal court in California, alleging that the company had given investors “materially false and misleading statements” about its business last year, specifically that smartphones would play a major role in its future strategy.
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