Hewlett-Packard is expected to fire CEO Leo Apotheker, but the company might struggle to find a new leader able to revive the computer maker after a series of ineffective strategy shifts and downgraded forecasts.
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“It’s not going to be easy,” said Michael Mullaney, who manages $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.” The company has been witnessing a slump in sales of its personal computers, and recently announced that it would split its hardware and software businesses.
Former eBay CEO Meg Whitman, a Hewlett-Packard director, may be appointed interim leader, while Todd Bradley, who runs Hewlett-Packard’s PC unit, and David Donatelli, head of the business in charge of servers, storage, and networking may be among the candidates for the permanent position. H-P might also look to Gary Moore, chief operating officer of Cisco , or Steve Mills, who runs the software unit at IBM .
H-P board directors met yesterday in committees and will gather today as a full board in order to discuss Apotheker’s future with the company. They will also reconsider a proposal to spin off the PC business, a move that Apotheker announced was under consideration on August 18, the same day H-P agreed to buy software maker Autonomy for $10.3 billion and said that it would discontinue products running its WebOS mobile software, including its TouchPad tablet, which failed to compete with Apple’s iPad.
Apotheker’s goal with the Autonomy purchase was to shift the company’s focus from lower-margin consumer products to more profitable corporate businesses such as servers, software and network services. However, Apotheker was unsuccessful in communicating the company’s vision to shareholders, a task that will be left to his successor, said Tony Ursillo, an analyst at Loomis Sayles & Co. in Boston, which owns H-P shares.
Hewlett-Packard’s technology solutions group, which includes services, software, and enterprise storage and servers, gained 14% in the third quarter, climbing to $15.9 billion. In contrast, revenue from sales of personal computers, tablets, and other consumer products fell 3.3% to $9.59 billion. For that reason, the company is considering focusing the former business while divesting itself of the latter, but it will hard convincing everyone that that’s the right move.
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Hewlett-Packard’s board needs to find a new leader who can build a company to rival the biggest providers of technology for corporations, namely IBM , Oracle , and Cisco . If Apotheker is out, the company will have to move fast, as its share price has already declined 44% this year.
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