10 of 11Image
In September of 2006, When Hewlett-Packard Chairwoman Patricia Dunn resigned after being involved a highly-publicized ethics controversy, the company sought to rebuild its reputation with the media and with stockholders. Mark Hurd, a member of HP's board of directors was selected to take Dunn's place.
With over 25 years of industry experience at NCR and two years spent as the company's CEO marked by strong leadership and improving the company's efficiency and net income, Hurd was thought to be HP's white knight.
Up until August of 2010, Hurd's tenure at HP was indeed a model one -- it remained the #1 vendor of desktop PCs and laptops, as well as maintaining its lead in consumer and enterprise printer market share. Hurd was also a major cost cutter, but this came at the expense of at 10% workforce reduction at the company, arguably a difficult decision for any CEO to have to make.
Under his leadership, the company also acquired EDS, a large IT services player, which would make HP on par if not a larger company than IBM, its largest competitor.
Additionally, with Hurd at the helm, HP also acquired Palm Computing for $1.2 Billion, which would enable the company to compete with Apple and Google in smartphones and tablets.
Things were looking up. At least until Hurd started prioritizing his activities as CEO with his other head.
Following an internal investigation of sexual harassment and misconduct with an HP contract employee, former reality TV actress Jodie Fisher, Hurd resigned in disgrace, only to land a job at Oracle, run by his close friend Larry Ellison, where he now leads what remains of Sun Microsystems.
Thrown into complete disarray, in September of 2010, HP's board of directors decided to recruit an outsider to run the company, Leo Apotheker, a former SAP executive. Apotheker's first ten months as CEO were largely uneventful, but things would soon change.
During the July 4th holiday weekend of 2011, HP's TouchPad tablet computer, the first product of the Palm acquisition engineered by Mark Hurd (who had resigned just under a year before) was finally released for $499 to highly unfavorable reviews. HP quickly attempted to price adjust by discounting the product $100, in the hopes that consumers would latch on.
Weeks went by without any news of the product's sell-through, until Mid-August, when it was reported that Best Buy had only sold about 10 percent of its inventory.
During HP's 3rd-quarter earnings call, and less than two months after the TouchPad's launch, Apotheker dropped a bombshell -- that it would be scuttling HP's mobile hardware division which produced the TouchPad, Pre and Veer WebOS devices, and would be looking for an alternative strategy for the mobile OS.
In addition, HP was announcing its intention to leave the PC hardware business, in hopes of becoming a more streamlined enterprise software and services company like IBM.
Whether it was Apotheker's intention all along to scuttle the last remaining vestiges of Mark Hurd's legacy is unknown, but many have speculated that he wanted to clean house since he started, and had been attempting to reverse over a decade of the company's mismanagement, starting with the Compaq merger completed by Carly Fiorina in 2002.
Unfortunately, Apotheker could not reverse the tide which was flowing against him. The reaction to scuttle the WebOS division and commit infanticide on the TouchPad and the new Pre phones was received overwhelmingly negatively, causing a race to the bottom when the company had a $99.00 per unit fire sale of all of its tablet computer inventory.
In the middle of September 2011, HP began a mass employee termination at the Palm division of approximately 500 employees. HP's stock continued to plunge, and it became evident that the Board of Directors needed to do something drastic.
On September 22nd, 2011, HP fired Leo Apotheker, and installed eBay founder and HP board member Meg Whitman as CEO, with the hopes of returning the company to a pattern of stable management and restoring the company's market value.
It's hard to say how Meg Whitman will perform as CEO, as she doesn't have the experience in managing a company the size and scope of HP, this despite having some background in consulting at Bain.
Will she continue the commitment to spin off HP's PC business? Will she sell WebOS or continue to develop it, with the hope of licensing it? Will the $10 billion purchase of Autonomy also proceed as planned? It's too early to tell, but something tells us the ride is far from over.