HP’s Board of Directors Consider Ousting Chief Executive After One Year in Office

HP’s Directors Unsatisfied with Leo Apotheker’s Slow Sales Growth, Questionable Strategy

by Anton Shilov
09/21/2011 | 07:24 PM

After one year in CEO office, Leo Apotheker may lose his position at Hewlett-Packard as the board of directors and investors are disappointed with cuts of sales forecasts and jarring strategy shifts that became common at HP in the past several quarters.


The BoD is weighing possibilities to oust the chief executive officer and consider appointing HP director and ex-Ebay chief executive officer Meg Whitman an interim CEO, according to Bloomberg news-agency that cites two sources with knowledge of the situation. The board of directors is specifically unsatisfied with the decision to spin off the PC division and plan to reconsider the proposal.

“There’s certainly a lot of investor discontent with them. There’s widespread frustration with the fact that numbers have been cut three times since he’s been there,” said Amit Daryanani, an analyst at RBC Capital Markets.

HP announced in mid-August that its board of directors had authorized the evaluation of strategic alternatives for its Personal Systems Group (PSG), including the exploration of the separation of its PC business into a separate company through a spin-off or other transaction. HP's PSG is the leading manufacturer of personal computers in the world and had annual revenues of approximately $41 billion in fiscal year 2010.

HP is implementing a plan to fundamentally transform the company. An important component of the plan is focusing its investments, resources and management attention to drive higher value solutions to enterprise, small and midsize business and public sector customers. HP believed that the exploration of alternatives for PSG will help the company accomplish its strategic goals and pursue profitable growth and enhanced shareholder value.

But it seems that the board of directors is now unhappy with Leo Apotheker’s proposal to spin off the PSG and discontinue the Palm/webOS business. Both PC and mobile devices represent two jewels in the crown of the world’s largest IT company and both have prospects for growth. Without personal computers and personal ultra-portable devices, HP will be unable to reach millions of potential customers, including those, who may be interested in business solutions. Earlier this month Rahul Sood, a former HP employee and the founder of Voodoo boutique PC maker, said that the PSG was HP's biggest strength.

Meg Whitman joined Ebay in March, 1998, when it had staff of 30 and revenues of approximately $4 million. During her time as chief executive officer, the company grew to approximately 15 000 employees and $8 billion in annual revenue by 2008.