HP Names Meg Whitman CEO
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By JORDAN ROBERTSON
September 22, 2011

SAN FRANCISCO (AP) -- Hewlett-Packard Co.'s decision to fire CEO Leo Apotheker after just 11 months and replace him with former eBay chief Meg Whitman is another dizzying turn of the executive merry-go-round at a company whose leadership issues are tearing it apart.

Swapping Apotheker, who has now been ousted from two high-profile CEO jobs in two years, with Whitman, a billionaire who is best known for the decade she spent building eBay and her run for California governor, is a decision designed to stem investor fury over a series of questionable strategy moves.

Whitman's star-power could be an asset for a company that struggled to gain credibility under Apotheker, who was previously little-known outside of the business software world. HP is no stranger to celebrity CEOs. But Carly Fiorina's run as leading lady, from 1999 to 2005, ended in shambles.

Despite Whitman's success at eBay, she is untested when it comes to running a sprawling company such as HP.

"She built up a one-trick pony, an online auction site, and she oversaw the growth of the company, but we are talking about a situation where someone needs to come in who has a technological background, an engineering and scientific background," said Steve Diamond, an associate professor at Santa Clara University School of Law. "And that is way outside of her skill set."

Diamond said the decision to change CEOs so soon points to continued disarray on HP's board, long a target of critics for the chaos it's caused at one of Silicon Valley's oldest and largest companies. Infighting and ego-driven drama has long plagued the board, from revelations in 2006 that HP had spied on directors and journalists to ferret out the source of leaks, to last year's dismissal of CEO Mark Hurd in an ethics scandal.

"There's no question the board is off the rails -- they need a smaller, tighter board that's committed to the idea of what the company does," Diamond said. "But they have a lot of people on the board from different industries. The tough job will be getting the board on board."

Whitman's appointment Thursday was Silicon Valley's worst-kept secret. Deliberations leaked out a day earlier to the delight of investors, who drove up HP's stock and apparently gave HP's board the push it needed to oust Apotheker.

HP's board met Thursday to finalize the change, having decided that Apotheker had lost the board's confidence in his ability to lead HP long-term, a person familiar with the matter told The Associated Press. This person was not authorized to speak on behalf of HP and spoke on the condition of anonymity. This person emphasized that Apotheker wasn't forced out because of any particular policy decision, adding that Whitman's appointment was influenced by the relative derth of candidates with experience running a large technology company and a strong record of execution.

Apotheker is resigning from HP's board.

The Wall Street Journal and AllThingsD websites had earlier reported HP's decision.

In a statement, HP's chairman Ray Lane said that HP is "fortunate to have someone of Meg Whitman's caliber and experience step up to lead HP."

"We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead," Lane said. "Meg is a technology visionary with a proven track record of execution. She is a strong communicator who is customer focused with deep leadership capabilities. Furthermore, as a member of HP's board of directors for the past eight months, Meg has a solid understanding of our products and markets."

HP's stock price has been nearly cut in half under Apotheker's watch. The decline was fueled by a mixture of shareholder resentment over repeated earnings disappointments and disappointment of Apotheker's fumbling of key announcements, particularly his decision to try and sell or spin off HP's personal computer business. In announcing the auction before a buyer was found, he created enormous uncertainty for buyers of the machines, substantially devaluing the business, analysts said. Apotheker's assertion that HP might keep the business after all was seen as a sign of tone-deafness.

Investors applauded the change. But it's not likely to quiet critics.

HP's stock fell $1.18, or 4.9 percent, to close at $22.80 on Thursday because of uncertainties about the company's future. The declines were worse than the overall market. The Dow Jones industrial average plunged 391 points, or 3.5 percent, on worries that the global economy is headed for another recession.