Will HP's new CEO be an outsider?
Mr. Platt, who is also chairman and president, said he will step down after overseeing the company breakup announced Tuesday.
During that one-year transition period, he will run the HP (NYSE:HWP) computer-related businesses that will be split from the test and measurement operations.
A board committee was named to search for a permanent successor to run the computer group, which will retain the HP name and account for about 85% of its revenues.
The board also includes several high-profile executives of big companies, including Sam Ginn, CEO of Airtouch Communications Inc. (NYSE:ATI), and John Fery, retired CEO of Boise Cascade Corp.
Several directors said they had agreed not to discuss the board's actions this week.
By one account, however, the board asked Platt if he wanted to stay for two years to help smooth the transition, only to be told by Platt that a quicker exit would make it easier to recruit a top-notch new CEO for the computer business. The suggestion pre-empted any board concern that Platt might overstay his welcome.
"It was a very elegant way to deal with succession planning," the adviser remarked. "There's no palace intrigue here."
But one HP director, speaking on condition of anonymity, suggested that the board wasn't too upset at Platt's proposal for an early departure. "CEOs don't last as long as they used to," this director remarked.
Informal style
Platt, a direct, unglamorous figure with a fondness for cigarette breaks, epitomizes what the company likes to call "the HP Way" -- an informal style that emphasizes job performance over perks such as fancy offices.
"Lew is what I would like to be when I grow up," said John Chambers, CEO of Cisco Systems Inc. (Nasdaq:CSCO). "His word is his bond. We have 42 partnerships with them, but not a single contract."
Soon after becoming CEO in 1992, Platt endorsed the company's multibusiness focus, declaring that "the market is moving right toward HP's strength: our dual expertise in measurement and computation. Customers are asking for that blending."
But the sprawling product mix more recently seemed like a liability. HP has shown barely any revenue growth in the past year, even as smaller technology companies enjoy a robust boom, and its stock has lagged behind market averages.
Platt earned $1 million in salary and $910,700 in bonuses in HP's latest fiscal year, but was forced to give back stock valued at $2.4 million under a payment scheme that reflects the company's performance.
By early 1998, it was clear that the instrument and computer markets no longer were moving in tandem. Platt hired McKinsey & Co. to perform a strategic review, and the consulting firm reaffirmed his hunch that breaking apart the company might make sense.
In December, HP began working with investment bankers at Morgan Stanley & Co. and Goldman, Sachs & Co. to study how such a divestiture plan could be carried out.
HP's fourth CEO
Historically, HP's top jobs have gone to executives who have spent the vast majority of their careers at the company. Platt, who has worked at HP for more than 30 years, is only the fourth CEO at the 61-year-old company.
Mr. Platt succeeded John Young, whose 1992 departure was widely characterized as a voluntary part of a long-planned succession. In subsequent months, though, people close to the company suggested that Young's tenure was cut short because HP's founders and other directors believed it was time for a change.
The board's new CEO search committee, to be chaired by Ginn and to include Platt, will look at both inside and outside candidates. "We are looking for somebody who is a proven leader," Platt said, adding that "outsiders have a way of asking questions that you wouldn't think of."
Executive recruiters said the company's very willingness to consider an outsider is a sea change for the company, akin to IBM's decision to pick Louis Gerstner as CEO.
"I would definitely go outside. The place needs a shake-up," said Frank Poirier, a San Francisco recruiter and venture capitalist.
Possible successors
Another factor is that several of the most highly respected executives in HP's computer ranks have left to join Silicon Valley startups. Ann Livermore, general manager of HP's enterprise computing division, is seen as Platt's most likely internal successor. But recruiters are already suggesting external candidates with broader experience and industry profiles.
Several recruiters cited Richard E. Belluzzo, former head of HP's computer business, as the most attractive outside candidate. He resigned in January 1998 to join rival Silicon Graphics Inc. (NYSE:SGI). An SGI spokesman said Belluzzo is committed to running Silicon Graphics, though he "is obviously a very hot commodity as an executive, and someone a lot of people would be in interested in."
Other potential candidates, recruiters said, include Sun Microsystems Inc.'s No. 2 man, Ed Zander; George Conrades, a former IBM (NYSE:IBM) executive who ran BBN Corp. until GTE Corp. (NYSE:GTE) acquired it; and Samuel Palmisano, an IBM senior vice president.
A spokeswoman representing Sun (Nasdaq:SUNW) said Zander was "insanely happy" working there. Mr. Conrades, a partner with Polaris Ventures in Waltham, Mass., was traveling Tuesday and unavailable for comment. An IBM spokesman declined to comment about recruiters' speculation about Palmisano.
--Joann S. Lublin contributed to this article.
Hewlett-Packard Co. signaled that an outsider may be hired to succeed its chief executive officer, Lewis Platt, a break from company tradition that underscores the challenges faced by the technology giant.
Mr. Platt, who is also chairman and president, said he will step down after overseeing the company breakup announced Tuesday.
During that one-year transition period, he will run the HP (NYSE:HWP) computer-related businesses that will be split from the test and measurement operations.
A board committee was named to search for a permanent successor to run the computer group, which will retain the HP name and account for about 85% of its revenues.
The board also includes several high-profile executives of big companies, including Sam Ginn, CEO of Airtouch Communications Inc. (NYSE:ATI), and John Fery, retired CEO of Boise Cascade Corp.
Several directors said they had agreed not to discuss the board's actions this week.
By one account, however, the board asked Platt if he wanted to stay for two years to help smooth the transition, only to be told by Platt that a quicker exit would make it easier to recruit a top-notch new CEO for the computer business. The suggestion pre-empted any board concern that Platt might overstay his welcome.
"It was a very elegant way to deal with succession planning," the adviser remarked. "There's no palace intrigue here."
But one HP director, speaking on condition of anonymity, suggested that the board wasn't too upset at Platt's proposal for an early departure. "CEOs don't last as long as they used to," this director remarked.
Informal style
Platt, a direct, unglamorous figure with a fondness for cigarette breaks, epitomizes what the company likes to call "the HP Way" -- an informal style that emphasizes job performance over perks such as fancy offices.
"Lew is what I would like to be when I grow up," said John Chambers, CEO of Cisco Systems Inc. (Nasdaq:CSCO). "His word is his bond. We have 42 partnerships with them, but not a single contract."
Soon after becoming CEO in 1992, Platt endorsed the company's multibusiness focus, declaring that "the market is moving right toward HP's strength: our dual expertise in measurement and computation. Customers are asking for that blending."
But the sprawling product mix more recently seemed like a liability. HP has shown barely any revenue growth in the past year, even as smaller technology companies enjoy a robust boom, and its stock has lagged behind market averages.
Platt earned $1 million in salary and $910,700 in bonuses in HP's latest fiscal year, but was forced to give back stock valued at $2.4 million under a payment scheme that reflects the company's performance.
By early 1998, it was clear that the instrument and computer markets no longer were moving in tandem. Platt hired McKinsey & Co. to perform a strategic review, and the consulting firm reaffirmed his hunch that breaking apart the company might make sense.
In December, HP began working with investment bankers at Morgan Stanley & Co. and Goldman, Sachs & Co. to study how such a divestiture plan could be carried out.
HP's fourth CEO
Historically, HP's top jobs have gone to executives who have spent the vast majority of their careers at the company. Platt, who has worked at HP for more than 30 years, is only the fourth CEO at the 61-year-old company.
Mr. Platt succeeded John Young, whose 1992 departure was widely characterized as a voluntary part of a long-planned succession. In subsequent months, though, people close to the company suggested that Young's tenure was cut short because HP's founders and other directors believed it was time for a change.
The board's new CEO search committee, to be chaired by Ginn and to include Platt, will look at both inside and outside candidates. "We are looking for somebody who is a proven leader," Platt said, adding that "outsiders have a way of asking questions that you wouldn't think of."
Executive recruiters said the company's very willingness to consider an outsider is a sea change for the company, akin to IBM's decision to pick Louis Gerstner as CEO.
"I would definitely go outside. The place needs a shake-up," said Frank Poirier, a San Francisco recruiter and venture capitalist.
Possible successors
Another factor is that several of the most highly respected executives in HP's computer ranks have left to join Silicon Valley startups. Ann Livermore, general manager of HP's enterprise computing division, is seen as Platt's most likely internal successor. But recruiters are already suggesting external candidates with broader experience and industry profiles.
Several recruiters cited Richard E. Belluzzo, former head of HP's computer business, as the most attractive outside candidate. He resigned in January 1998 to join rival Silicon Graphics Inc. (NYSE:SGI). An SGI spokesman said Belluzzo is committed to running Silicon Graphics, though he "is obviously a very hot commodity as an executive, and someone a lot of people would be in interested in."
Other potential candidates, recruiters said, include Sun Microsystems Inc.'s No. 2 man, Ed Zander; George Conrades, a former IBM (NYSE:IBM) executive who ran BBN Corp. until GTE Corp. (NYSE:GTE) acquired it; and Samuel Palmisano, an IBM senior vice president.
A spokeswoman representing Sun (Nasdaq:SUNW) said Zander was "insanely happy" working there. Mr. Conrades, a partner with Polaris Ventures in Waltham, Mass., was traveling Tuesday and unavailable for comment. An IBM spokesman declined to comment about recruiters' speculation about Palmisano.
--Joann S. Lublin contributed to this article.