New HP CEO vows to maintain course

If you thought the dramatic ousting of Leo Apotheker would shift HP into reverse, think again. In her first interview as HP CEO, Meg Whitman told BusinessWeek that the company is still going full-steam ahead with the previously announced strategy. "We are behind the actions that were taken on Aug. 18," she said.

That means HP will proceed with the $10.3-billion buyout of enterprise software firm Autonomy. Whitman also vowed that HP will decide whether to sell or spin off its PC division "as soon as possible," acknowledging that uncertainty on that front "doesn’t help the business, doesn’t help customers, doesn’t help shareholders." Yeah, no kidding.

DigiTimes reported last week that notebook manufacturers were expecting HP to backtrack and keep its PC division in-house after the CEO change. However, Whitman’s statements don’t leave room for much backpedaling. I suppose that means the fate of webOS is also sealed. One has to wonder, then, why Apotheker got the boot. If you’re going to drive into a wall at full speed anyway, why change drivers at the last minute?

Comments closed
    • sluggo
    • 8 years ago

    HP will reverse it’s decision on PSG. The one-time cost of spinning it off, plus the revenue hit to the remainder of the company from the loss of tie-in deals will be to great to bear and would depress the remaining company’s stock price for a long, long time. Too many things have to go right for this to be successful, and they couldn’t have picked a worse global economic environment in which to try it.

    Meg is making the right sorts of noises about maximizing shareholder value, and this spin-off, however they do it, is too expensive right now.

      • destroy.all.monsters
      • 8 years ago

      Nothing I have read so far supports your view that she’s going to back out of it. Nor are they backing out of the exorbitant price being paid for Autonomy. If you have some links showing Whitman saying they’re going to back out I’d like to see them.

      The bottom line is that these are moves the board wants. It’s now clear they weren’t Apotheker’s ideas – he was merely implementing them and consequently became the fall guy.

      Ray Lane and the rest of the board need purging.

        • sluggo
        • 8 years ago

        If there were links to Whitman making such a statement then I wouldn’t have bothered posting.

        The Autonomy deal was too far down the road for a reversal. The PSG deal, on the other hand, was just about to get into the tricky bits. If the decision is going to be revisited, now’s the time. I’m not saying PSG was a bad idea or that the board doesn’t want it to happen, I’m just saying it won’t happen in the next 24 months.

    • axeman
    • 8 years ago

    Maybe it doesn’t matter much, as long as they keep profiting from what’s apparently the most valuable liquid on the planet… printer ink.

    • Laykun
    • 8 years ago

    I wonder how my further HP’s stock will plummet after this announcement.

    • link626
    • 8 years ago

    so what was the point of ousting the old CEO again ?

    • destroy.all.monsters
    • 8 years ago

    On the bright side this board’s actions will be business school fodder for generations to come.

    How not to run a company 101.

      • jpostel
      • 8 years ago

      I was trying to think of a company that had this kind of market cap collapse without some sort of major financial scandal attached to it. I can’t think of a single one.

        • ludi
        • 8 years ago

        Montgomery Ward?

        In any case, there’s still plenty of time for the HP board to get pulled into a financial scandal.

    • heinsj24
    • 8 years ago

    Please tell me HP is doing this for the lulz.

      • NeelyCam
      • 8 years ago

      ..and we all know how much the investors appreciate the lulz

    • RickyTick
    • 8 years ago

    Since Samsung said “no thanks” to HP’s pc business, what’s the chance a major retailer might be able to make it work. Best Buy probably doesn’t have the money, but Wal-Mart might. With their ability to squeeze manufacturers, I bet they could make it slightly more profitable. Just something to think about.

    • ludi
    • 8 years ago

    [b<]total hp move[/b<] Doubling down on something you just screwed up very badly. Or, a heroic effort to keep a train wreck moving forward in order to satisfy the whims of a crazy boss or other superior. [i<]Person 1: He's still calling her even though her brother threw him down the stairs last week?[/i<] [i<]Person 2: I know, total hp move.[/i<]

      • dpaus
      • 8 years ago

      LOL – Meg better hope that Dan Savage doesn’t get ahold of this…

    • Voldenuit
    • 8 years ago

    Who are they going to hire next? Zapp Brannigan?

      • ludi
      • 8 years ago

      Failed business strategy [i<]and[/i<] recurring Title IX sexual harassment claims? I guess that would be something new.

      • destroy.all.monsters
      • 8 years ago

      If Kif is there to do the mop up (and all the heavy lifting) then they would be in fine hands. 🙂

        • Geistbar
        • 8 years ago

        Hah. I thought the same thing when I read Voldenuit’s comment, with the additional caveat that with Kif as part of the package, HP would probably be better off than with any of their recent CEOs.

    • dpaus
    • 8 years ago

    Damn the torpedos! Full speed ahead!!

    • Thresher
    • 8 years ago

    So the strategy is to become more of a services company and get rid of the hardware.

    They want to be a player in a market with IBM, SAP, Oracle, and about a half dozen other HUGE players.

    Certainly there’s room for another, right? What could go wrong?

      • crsh1976
      • 8 years ago

      Everything?

      It’s a very strange time to make such a move.

        • Scrotos
        • 8 years ago

        Remember that time that sarcasm totally eluded you? Yeah, that was the best!

    • kamikaziechameleon
    • 8 years ago

    Wow, HP makes even less sense now than it did last week.

    • nstuff
    • 8 years ago

    If things are going poorly at any company, you can really only blame management… in this case, the “management” is the Board. it only makes sense. They obviously wanted to repeat an IBM and convert HP into a services company. They hire a software guy to help with this and they ask him to nuke the PC division and the Palm division. He does what they want, but lacked the finesse to do it without causing a huge uprawr (pretty much he had an impossible job and i doubt anyone would be able to do what they wanted without causing a huge stir).

    So they fire him and get someone in (another software person) who they feel has better PR / people skills.

    The press release when they hired Whitman only proves it’s the board that is really doing all of this:
    “We are fortunate to have someone of Meg Whitman’s caliber and experience step up to lead HP,” said Lane. “We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead. 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.”

    She’s going to continue on the path of killing off HP, but they hope she’ll do a better job of doing it without causing the stock from falling another 50%.

      • albundy
      • 8 years ago

      so “what’s an HP?” will soon join “what’s an IBM?”?

    • ronch
    • 8 years ago

    Replace a moron with another moron. It’s the HP way.

    • FuturePastNow
    • 8 years ago

    1) Old CEO makes stupid decision

    2) Board fires old CEO

    3) Board hires new CEO

    4) New CEO continues on stupid course

    5) Board fires new CEO

    6) Old CEO and new CEO compare their huge severance packages and laugh at the company they just looted and destroyed

      • derFunkenstein
      • 8 years ago

      The new CEO is part of the board that approved these bad decisions. Continuing down this path is no surprise.

      • albundy
      • 8 years ago

      lucky mofo CEO’s, raking in the dough! Thats gonna cause alot of people to lose their jobs…yay for the great economy!

    • Jigar
    • 8 years ago

    Actually the head lines should read [b<]New HP CEO vows to maintain the train wreck course [/b<]

      • cheerful hamster
      • 8 years ago

      How about “New HP CEO vows to maintain curse.”

    • Silus
    • 8 years ago

    What I don’t get is why do they want to sell the PC division ? They were number on in that area…Are the costs much higher than the profits ? Are they decreasing in terms of market share year after year and just want to end it before it gets worse ?

      • DeadOfKnight
      • 8 years ago

      It’s profitable, but the profit margins don’t justify the headache for them anymore. Apple makes huge profits in the same business and they’re growing rapidly, but HP would have to change their whole system to gain back that market share if it’s not too late. Intel is trying to help in that area but I doubt it will be enough. We’ll see in 2013 if Ultrabooks can really change the PC industry as a whole.

        • bwcbiz
        • 8 years ago

        Yeah, the retail market is very vulnerable to economic conditions. Shareholders like growth, so a low-margin business with sales numbers that bounce up and down is a problem. If the leadership had the imagination to differentiate HP from the commodity-level PCs like Apple has done, they could charge a premium and raise the margins to the point where the profit justifies the unpredictable volume, they’d keep it.

        They still plan to keep the enterprise HW business. That has higher margins and the mood-swings of the market are slower than the retail.

        Personally, I can see why they want to get out of retail PCs. But the decision to ditch the WebOS products without double-checking the price structure reeks after the $99 specials netted so much interest. There was a market there. They just couldn’t find it.

        So that’s probably why Apotheker is going and why they’re continuing with the strategy: They misjudged the tablet market and then let world+dog know how badly they misjudged it when they put the $99 special on. But they can’t backtrack and offer $200 Touchpads as a regular product now, so they canned the whole division. All in all, the board seems bent on converting HP from a hardware company to a software/services company.

        • Althernai
        • 8 years ago

        The profit margins are not the point. I think somebody on TechReport (dpaus?) pointed this out in an earlier discussion: the reason they need the PSG is that it supports their much more lucrative enterprise business. Here is essentially the same statement made by a [url=http://blogs.wsj.com/deals/2011/09/23/will-h-p-still-spin-off-the-pc-business/<]Wells Fargo analyst[/url<]: [quote<]The PC business has the lowest corporate margin, but it generates about $2B in profits, drives sales synergy, and provides significant component scale. Servers and PCs are often sold together and customers across all market segments have built relationships with HP in that manner. Absent PC’s, we think HP’s other hardware units could see revenue decline and gross profit suffer.”[/quote<]

          • dpaus
          • 8 years ago

          Wow – someone actually reads what I write… Thanks; I thought I was only here to give everyone someone to thumb down 🙂

            • NeelyCam
            • 8 years ago

            No – that’s [i<]my[/i<] job.

        • willyolio
        • 8 years ago

        jumping out of a market where you’re number one and into a market where you have to claw your way up against other well-established players doesn’t justify an increase in profit margins, especially if overall revenue is going to take a nosedive.

          • TREE
          • 8 years ago

          What I don’t understand is HP’s short sightedness. HP is one of the few companies that have the capability of “smoothly” transitioning across tech markets. As they own the largest PC market share, they could utilise their brand name and popularity as a means to strike deals, in both corporate and retail sectors. They would be able to sell hardware and software in discounted bundles, much in the same way that Intel did with early Atom processors and corresponding chipsets/motherboards. Customers would be guaranteed software that is fully optimised, compatible and supported on the HP systems.

          It doesn’t need to be software or hardware, HP could utilise both divisions to leverage one another.

          The stupidity emanating from this company is absurd.

    • sonofsanta
    • 8 years ago

    This is just depressing to watch now. Really quite sad to see HP fall like this, when their equipment is so good, at least from my professional perspective.

    • kvndoom
    • 8 years ago

    Set phasers to Fail!

    • destroy.all.monsters
    • 8 years ago

    That’s what the captain of the Titanic said too.

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