Will ousting Apotheker at HP make any difference?

Will ousting Apotheker at HP make any difference?

Summary: A baying media seems ready to write Leo Apotheker's epitaph. But will it make any difference?

TOPICS: Hewlett-Packard

I prepared the above graphic about four weeks ago in anticipation of something like this.

I've been sitting on the sidelines watching today's episode of the HP drama unfold among those who have a good sense of what's going on and those who are clueless. It makes for interesting reading. Bloomberg kicked the ball into play with a strongly worded piece implying that Leo Apotheker's ouster as CEO is a done deal:

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.

Our own Larry Dignan picked up the beat setting out reasons why Apotheker's time may be done but noting it is not a done deal. In between, we have TechCrunch calling for the return of Mark Hurd:

Hurd, first and foremost, is an operator and a damn good one. He made a big strategic bet by buying Palm for its touch computing OS—a bet which may or may not have ever panned out, but at least it was a move which recognized the tectonic shift about to happen to the PC industry.

I tried hard not to laugh at that nonsense but heh - have blog, have opinion. Pretty much everyone in between seems to think Apotheker's time is up. For me, the most reasoned responses are coming from Rob Enderle who was quoted in Computerworld:

"Companies in HP's space are required to be extremely stable and reliable," said Enderle. "Changing the CEO spot destroys the image that you can trust the direction presented by the company or the promises of its executives."

HP may be better served by providing a better "backstop" to Apotheker and addressing the leak problem.

"Unfortunately the leaks are driving premature decisions and may be taking this choice away from HP's board," he said.

We've already seen evidence of this when Apotheker's PR voice was shunted off in favor of Marty Homlish handling communications. Fat lot of difference that made.

At SAP TechEd, I met with HP folk and first words on their lips went something like: "Don't ask us about what's going on internally, we don't know and won't say anyway." Clearly the word has gone out but that doesn't stop those inside HP from talking to anyone willing to print up a juicy headline. It has to be people at board level because this is not the kind of thing those further down the food chain would get to hear about in any detail.

I find the whole saga troubling. I can't think of anyone who says Apotheker's appointment was a good one. The reasons don't stack up to me other than the fact he had a bad time when let loose at SAP. Wrong guy, wrong time for which he was not at fault. That responsibility falls squarely on the SAP board. My sense is that the analyst and media communities decided they didn't like Apotheker from the get go and have proceeded to give him a bloody good kicking at every opportunity.

But when you ask the next question: 'Who would have taken the top job at HP?' the conversation suddenly stops. The much admired Ray Lane didn't want it but was prepared to back Apotheker. That now looks like a bet he might live to regret if Apotheker is kicked out.

On the other hand I find it disingenuous that all the voices that were screaming recently for the whole of the HP board to go seem content to let Meg Whiman have a go - if she is approached and accepts.

In all of this there are two facts that everyone seems to have ignored.

  • In her first year as CEO, Carly Fiorina presided over a share price slump every bit as bad as that we see under Apotheker's leadership. She survived to build what at the time was the largest hardware vendor on the planet.
  • At the point when Apotheker's predecessor left, the company was at a tipping point where results were only ever likely to go downhill. That was his legacy to HP. One that Apotheker inherited and over which there is little he could do.

Has Apotheker handled subsequent events as well as he might? No. But that doesn't matter if the strategy is sound. So far all I can see people really bitching about is the proposed Autonomy purchase. No-one has presented a convincing argument for any of Apotheker's other moves other than to moan about the timing. Given the sieve like state at HP could he have done any different without having to deal with more whispers?

But times change. If HP responds to a baying media then it really is in trouble. Apotheker can still survive and course correct. But job number one has got to be about plugging the stream of damaging leaks while building a team prepared to do what's right for the company instead of infighting to protect their own fiefdoms. It's simply not possible to run a business based upon ill informed public opinion supported by leaked information that may or may not be part of policy or with teams that are at war with one another. If that means firing more board members then so be it.

In the alternative, Apotheker could save himself a lot of grief and simply hold his hands up and say: enough is enough.

As always with HP, the soap opera will continue as nervous investors look for more short term fixes but without the board having any coherent remedy upon which they can agree for the long term.

Topic: Hewlett-Packard

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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  • It's too late

    I don't understand how keeping Apotheker around and "backstopping" him solves the issue of being "stable and reliable," or of being a company whose executives can be trusted.

    Apotheker is the guy who told the world that WebOS was the future, that it was going to be on HP's entire line, and now we know that the whole time he was planning to ax not just WebOS, but the whole client-side product line. It's either that, or he didn't know himself that he was about to axe HP's client-side products, which is probably worse.

    Enderle is right: $100 billion companies do not whipsaw their customers, employees, and investors. That HP is doing this on a regular basis tells us that something Very Wrong is going on there. That they would even think of replacing Apotheker without having quietly engaged a search firm to find a replacement -- leaving them looking around the boardroom for a new CEO -- says the thing that is Very Wrong is actually in the boardroom.

    Where is Carl Icahn when you need him?
    Robert Hahn
  • RE: Will ousting Apotheker at HP make any difference?

    @Robert Hahn
    >>That they would even think of replacing Apotheker without having quietly engaged a search firm to find a replacement -- leaving them looking around the boardroom for a new CEO -- says the thing that is Very Wrong is actually in the boardroom.<br><br><br>+1
    Ram U
  • Why don't most companies just outsource their CEO roles?

    Find some random over-seas worker and pay them $25/hour. Chance are they will do better than most of the people board members find for CEOs.
  • Replacing Apotheker is stupid; all strategic failure decisions of HP were

    ... done by media/Wall Street dear Mark Hurd.

    What Apotheker is left to deal with consequences of Hurd choices (like WebOS, Palm acquisition, so on).
  • Meg Whitman is just Carly II

    Just like Carly, Meg wouldn't have the first clue what it would take to run an enterprise like HP.
    terry flores
  • RE: Will ousting Apotheker at HP make any difference?

    You are quite right Dennis. The board needs to follow through on the enterprise strategy they (presumably) signed off on, instead of reacting with a kneejerk to media rumors.
  • RE: Will ousting Apotheker at HP make any difference?

    Remember what happened last time HP tried to plug leaks? Board resignations, Chairman stepped down, firings, legal investigations, etc.

    Plugging leaks almost never works. Get the business strategy right, get the top management team in alignment, send the high-drama people packing, focus on the business, and the leaks will dry up soon enough. Obsession with leaks almost always leads to missteps, even scandals. Remember Watergate? That started out as an operation to plug leaks, too.
    kevin mcguirk
  • Drop Apotheker or he drops HP

    His strategy is to do something completely different from the market HP dominate.

    Like a Pepsi CEO taking over Apple and decided to make Apple cola instead of computers!

    Why? Because the CEO knows how to make cola but doesn't know how to run a computer company?

    Seriously, would you let him sack the company rather than just sack him?

    Do you think he can take a tiny business and turn it into a huge business, replacing an existing huge business which he's selling off?

    Does he have a track record of growing businesses at that rate? Does ANYONE have a track record of growing business at that rate?

    Does he even have a track record of growing businesses AT ALL?

    The board, presumably the part of the board that is competent, needs to convince the waverer's to boot the idiot out and the people who backed him need to quietly leave the board and go back to their nursing homes. He's already destroyed nearly half of HP's value just opening his mouth.

    It takes a long time to build value and a short time to destroy it, which type is he?
    • RE: Will ousting Apotheker at HP make any difference?


      Hey, one moment. Board knew very well that Leo is enterprise software guy, without experience in selling commodity hardware. And they decided to hire him. The only logical conclusion is that their idea was that he should navigate HP out of commodity market towards enterprise, in any other way it would be logical to hire somebody else as a CEO. So what, now, when he just started to do what he was supposed to do, board has changed their minds? How nice.
      Mr Wrong
      • Logical no

        "Hey, one moment. Board knew very well that Leo is enterprise software guy, without experience in selling commodity hardware. And they decided to hire him. "<br><br>I don't think anyone believed that you hire a CEO and instead of the CEO changing to learn the business, he tries to change the business to what he knows. So no, the board just hired a guy who turned out to a bit of a dud hire. Well no selection process is perfect.<br><br>"should navigate HP out of commodity market towards enterprise"<br><br>In no sense is he navigating anything. He's trying to warp from one place to a completely different place with no in-between step. The place he's trying to warp to, doesn't exist yet either, and his track record says he can't make that place.<br><br>It's not logical to continue down the wrong road just because you chose it when you didn't have all the facts. Or rather to make whirring sounds and pretend warping actually exists, which is what he's doing here.<br><br>Now the board should have the clear measure of him, better to sack him and move along quickly.<br>

        Hurd is not special, he was just a competent manager in a world filled with competent managers. If Hurd can run HP and grow it's value then the board can find another competent manager who can run HP.

        Apotheker has shown that that manager isn't him.
    • RE: Will ousting Apotheker at HP make any difference?

      @guihombre - yes he does and no - as you will see, the board is FAR from competent
  • RE: Will ousting Apotheker at HP make any difference?

    Well, if you think that it's a good idea to dump WebOS and HP PCs, then I guess you would want to keep him.

    Personally, I think they were going down the right path with these things.

    But, the bottom line is, if they can dump these two things this quickly, they should be able to dump him just as quickly.