Apotheker Sacked

8/4/2019 Apotheker Sacked

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Hewlett-Packard Co. (HPQ), weighing the ouster of Chief Executive OfficerLeo

Apotheker, may struggle to find a new leader who can revive the ailing computer

maker after 11 months of strategy shifts and slashed forecasts.

Hewlett-Packards board plans to consider firing Apotheker, two people familiar with

the matter said yesterday. It may appoint formerEBay Inc. (EBAY)CEOMeg

Whitman, a Hewlett-Packard director, to serve as an interim leader, said one of the

people. The stock had plunged 47 percent on his watch as of Sept. 20, the worst

performance in theDow Jones Industrial Average.

Its not going to be easy, said Michael Mullaney, who helps manage $9.5 billion,

including Hewlett-Packard shares, at Fiduciary Trust in Boston. They have to go

back and redefine what they want to be as a company, go back to the drawing board.

Apothekers ouster would leave the board looking for a leader who can do a better job

helping Hewlett-Packard weather a personal-computer slump while pushing further

into the market for products that deliver computing services over the Web. CEO

candidates may also includeTodd Bradley, who runs Hewlett- Packards PC unit, and

David Donatelli, head of the business in charge of servers, storage and networking,

saidJayson Noland, an analyst at Robert W. Baird & Co. in San Francisco.

Other possible candidates that would make sense includeGary Moore, chief

operating officer of Cisco Systems Inc., orSteve Mills, who runs the software unit at

International Business Machines Corp., said Shaw Wu, an analyst at Sterne Agee &

Leach Inc. in San Francisco.

Board Discussions

Hewlett-Packard directors met yesterday in committees and will gather today as a

full board, according to a person close to the situation. Directors are concerned aboutthe stock price and its lack of improvement under Apothekers leadership, the person

said. Some top Hewlett-Packard executives also opposed the acquisition of

Autonomy Corp., a deal pushed by Apotheker, according to the person.
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Hewlett-Packard, based in Palo Alto,California, jumped $1.51, or 6.7 percent, to

$23.98 yesterday on the New York Stock Exchange after Bloomberg reported the

possible management change. The stock is still down 44 percent since Apotheker, 58,

became CEO on Nov. 1, compared with the 1.5 percent decline in the Standard &

Poors 500 Index.

A new CEO would be Hewlett-Packards seventhleadersince 1999, whenCarly

Fiorinatook over from Lewis Platt. Fiorina departed in 2005 and was replaced on an

interim basis by Robert Wayman, until the company namedMark Hurdto the top

job. After Hurd resigned,Cathie Lesjaktook the reins temporarily until Apotheker

came aboard.

PC Options

In addition to discussing Apothekers future, the board is reconsidering a proposal to

spin off the PC business, a person familiar with the matter said. Apotheker, the

former CEO of German software maker SAP AG, said the company was exploring

options for that unit on Aug. 18.

The same day, Hewlett-Packard agreed to buy software maker Autonomy for $10.3

billion. The company also said it was discontinuing products running its WebOS

mobile software, including smartphones and tablets -- less than six months after

saying it planned to put the operating system on every Hewlett- Packard computer.

Shares slumped after the announcements on concerns that Hewlett-Packard was

paying too much for the acquisition and the strategic changes showed a lack of

deliberation.

Corporate Focus

With the Autonomy purchase and shift in focus, Apotheker was pursuing a plan tolessen the companys reliance on lower- margin consumer products and concentrate

on more-profitable corporate businesses such as servers, software and network

services. Any successor to Apotheker will need to do a better job communicating the

companys vision to shareholders, said Tony Ursillo, an analyst at Loomis Sayles &

Co. inBoston, which owns Hewlett-Packard shares.
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Leos tenure as CEO has been disastrous, Ursillo said.

Under one scenario, the board may appoint Whitman until a permanent candidate

emerges, according to a person with knowledge of the boards thinking.

Whitman, 55, has been a Hewlett-Packard director since January, two months after

she lost a bid to become governor of California. Before entering politics, Whitman

spent 10 years at the helm of EBay, the worlds largest online marketplace, and

established a career at consumer-related companies.

Whitmans Consumer Expertise

For Hewlett-Packard, which is focusing on selling to businesses, Whitman is

probably not the right person for the long-term, said Dana Stalder, a partner at

venture capital firm Matrix Partners inPalo Alto, California.

Its not clear to me that someone who spent 30 years in the consumer space is the

right person for an enterprise technology company, said Stalder, who worked under

Whitman for seven years at EBay. HP is increasingly becoming an enterprise

company, given the focus on enterprise software and services.

Sales in Hewlett-Packards technology solutions group, which includes services,software and enterprise storage and servers, rose 14 percent in the fiscal third

quarter to $15.9 billion. By contrast, revenue in the business that comprises

notebooks and PCs fell 3.3 percent to $9.59 billion.

Donatelli, executive vice president of the enterprise business, joined Hewlett-

Packard in 2009 after 22 years at EMC Corp., the worlds biggest maker of storage

computers. Sterne Agees Wu, along with Noland from Baird, said Donatelli may be a

candidate for the top job.

Challenging IBM, Oracle

The company needs a leader who can mount a challenge to the biggest providers of

technology for corporations, such as IBM, Oracle Corp. and Cisco, Wu said.
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They basically need a turnaround specialist, Wu said. Its not going to be an easy

role, whoever it is. Autonomy and the PC business -- theyve got to figure out what to

do there because not everyone thinks those are necessarily the right moves.

Bradley, who runs the PC business, said last month that he would like to oversee the

unit if its spun out as a separate company. Bradley, 52, came to Hewlett-Packard in

2005 from PalmOne Inc., where he spent four years.

Im very focused on continuing to workwith the team of people that have been so

successful at making this the largest and most profitable PC company in the world,

Bradley said in an Aug. 23 interview on Bloomberg West.

As much as anything, Hewlett-Packard has to find an executive who can help thecompany get past a series of embarrassments that date back to a boardroom spying

scandal in 2006 and continued through last year, when former CEO Hurd quit amid

sexual-harassment allegations.

Its been really hard to watch what seems to be a company thats lost its way, said

Leslie Berlin, project historian of Silicon Valley Archives atStanford University. The

boardroom fights, the job cuts -- its almost unrecognizable from the Hewlett-

Packard that was once the star attraction in the Valley.

To contact the reporters on this story: Ari Levy inSan Franciscoat

[email protected]; Danielle Kucera in San Francisco at

[email protected]

To contact the editor responsible for this story: Tom Giles [email protected]
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Apotheker Sacked