Hewlett-Packard Chairman Ray Lane (pictured) defended HP's decision to name Meg Whitman CEO without conducting an extensive review (internal and external) of potential HP CEO candidates. Lane said he's "embarrassed" by poor HP communications in recent weeks.

The VAR Guy

September 22, 2011

4 Min Read
HP Chairman Ray Lane Defends Hewlett-Packard Board, CEO Move

ray lane

Hewlett-Packard Chairman Ray Lane (pictured) defended HP’s decision to name Meg Whitman CEO without conducting an extensive review (internal and external) of potential HP CEO candidates. Lane said he’s “embarrassed” by poor HP communications in recent weeks. But Lane said former CEO Leo Apotheker, who exited HP today, had three shortcomings that triggered HP’s “absolutely necessary” CEO change. Lane did not address the key issue of anonymous sources — apparently within HP — and media leaks that undermined Apotheker’s leadership in recent months.

During a call with Wall Street analysts at 5:00 p.m. eastern today, Lane introduced former eBay leader Meg Whitman as CEO and also answered questions about the actions of HP’s board.

Lane admitted that the board was “embarrassed” by the poor communications back on August 18, the day HP announced plans to:

  • kill WebOS TouchPads;

  • acquire Autonomy (a software provider); and

  • potentially spin off or sell the HP PC business.

Lane said HP switched CEOs for three reasons:

  1. Team Play: “This is a big, big company that requires an executive team to be on the same page,” said Lane. During adhoc meetings Lane said he “didn’t see an executive team working together.”

  2. Lack of Operating Execution: HP needs a CEO who “has the ability to get down deep into the business and understand what’s going on in each business” so that operations run smoothly.

  3. Communications: Lane conceded that HP “struggled” to effectively communicate the Aug. 18 announcements to customers, press and investors.

Meg Whitman, Lane added, has strengths in each of those three areas. Lane said the CEO switch was “absolutely necessary.”Lane also distanced himself from HP’s original selection of Apotheker as CEO. The current board, Lane said, “did not select Leo [as CEO]. Half the board is new after Leo [arrived as CEO]”

Signs of HP Investor Concern

Still, multiple Wall Street analysts asked Lane why investors should have faith in HP’s board at a time when HP has stumbled with corporate communications, business execution and executive leadership.

Lane’s response, which he said was “from the heart,” included these points:

“In January [2011] I added five board members to this board. This is not the board that was around for pretexing (a spying scandal that targeted IT reporters); this is not the board that fired Mark Hurd. This is not the board that did everything you want to write about everyday. It’s just open season for the press to write about this board. This board with Ann Livermore and Leo was eight new members this year. We have strong individuals and CEOs who work really well together…I think the company and the shareholders are well-served by this board. It’s our operating execution that needs to improve. We made a decision in Meg Whitman to lead us to that performance.”

New HP CEO, Same Strategy

Rather than reverse course, Whitman said she will execute an HP plan that was already in place; her big priority is to improve HP’s strategic and operational execution.

“We’ll continue to invest in our market-leading servers, storage, networking, printers, PCs, software and service offerings,” said Whitman. “As you all know our plan includes the evaluation of a spin-off of HP’s PC business, the buyout of Autonomy and the discontinuation of the TouchPad.”

Whitman said HP’s board is committed to reaching a decision about the PC business by the end of the calendar year “if not sooner.” The Autonomy buyout is proceeding as planned to be completed by the end of the year, and HP continues to “explore options for WebOS,” an operating system that was orphaned when HP killed its related TouchPad and smartphone businesses.

Noted Whitman: “I’m supportive of the actions that were announced on August 18. I will review a number of the strategic initiatives. I understand the investment community. I try my best to say what I mean and mean what I say. I think the strategy is right and Ill dive in and have a more informed point of view.”

How will HP win back investor, customer and employee confidence? Whitman said:

“The way we need to rebuild the confidence of investors and employees is we have to execute. We have to say what we’re going to do, we have to mean it and we have to deliver the results. In the end the only thing thing that will rebuild confidence in this company is to deliver the results, and that’s what I intend to do.”

Media Leaks Hurt Leo

Still, Lane and Whitman failed to address a key point: Although Apotheker certainly stumbled as HP’s CEO, Apotheker’s leadership was further undermined multiple times by anonymous media leaks.

Back in August, HP scrambled to control messaging and communications after sources leaked word of HP’s dramatically evolving tablet, PC and software acquisition strategies. And earlier this week, major media organizations reported that HP’s board was considering a CEO change.

Those leaks suggest HP’s problems potentially extend beyond the CEO office at HP…

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