After 11 tumultuous months, Leo Apotheker was fired on Wednesday from the CEO role at Hewlett-Packard (HP). There were a number of contributing causes cited, including
- failing to make the numbers for three straight quarters,
- board-approved but badly announced strategies to (1) kill off the recently-launched tablet and webOS products after less than six months on the market and (2) to spin out HP’s personal computer division which is causing mass customer confusion, and
- a very expensive acquisition for Autonomy, when in fact Apotheker promised the Board he wouldn’t make any acquisitions that would cause the Board to lose sleep.
Apotheker replaced Mark Hurd, who resigned after he was caught up in a sexual harassment investigation. Hurd also had the job of cleaning up a Board scandal, in which the Board hired private investigators to investigate other board members. This included tapping their phones and collecting their garbage to identify the source of a leak of confidential information. Messy stuff. Hurd had been the CEO since 2005 when he replaced Carly Fiorina. Ms Fiorina was CEO during the controversial acquisition of Compaq. While she had a particular vision about making HP a larger and dominant player, and won the day with the acquisition, she was never as successful at driving the quarterly results and benefits from the merger. Those results did finally come under Mark Hurd.
Through all of this time, the Board has been presiding over a similarly tumultuous ride in shareholder value. In 2005, the market capitalization of HP was about $50B, it reached peaks in 2007 and 2009 around $130B, and is now near $47B. So where is the Board in all of this? Well, actually, stepping up to be Acting CEO. Board Member Meg Whitman, the founder of eBay, is stepping into the job. Board Chairman Ray Lane defended the choice of Whitman, saying they had looked at internal candidates and still had the search results from the last round when they hired Apotheker. That doesn’t say good things about their opinion of the internal strengths, or their view of the external candidates.
Time will tell if there is a plan, or if this is just another step in an uncoordinated direction.
Companies need clear strategies, leaders who can lead, and Boards that can stay the course. HP’s future outlook is suddenly even more cloudy than before, and it seems entirely self-inflicted. There is certainly strategic risk and “leader risk” (do we have the right leader?) here and there may even be a long-term survival risk here.
One clear risk the Board will face in seeking the next CEO is that many competent candidates may well say, “No thanks” when HP’s Board comes calling.