Hewlett-Packard's board may fire CEO Leo Apotheker, according to multiple mainstream media reports. Apotheker faces intense pressure as HP navigates strategic and profit challenges.

The VAR Guy

September 22, 2011

3 Min Read
HP's Main Problem: Potential CEO Change or Media Leaks?

Leo Apotheker

Hewlett-Packard‘s board may fire CEO Leo Apotheker, according to multiple mainstream media reports. Apotheker faces intense pressure as HP navigates strategic and profit challenges. Apotheker has made some controversial moves but he isn’t HP’s biggest problem. Instead, the biggest issue facing HP involves media leaks that undermine confidence in the company and Apotheker’s management team.

Why is Apotheker under fire? The answers are simple: When he first joined HP, Apotheker predicted WebOS (acquired when HP purchased Palm) would become the mainstream front-end operating system to HP’s back-end cloud services. Early in his tenure, Apotheker also said PCs were strategic to HP. But by August 2011, Apotheker completely changed his tune — he killed the WebOS TouchPad tablet business and disclosed plans to potentially sell or spin off HP’s business. At the same time, HP paid a huge premium to acquire Autonomy, a software company.

Losing Faith In Leo?

All of the moves described above have occurred in less than 12 months. Some pundits on Wall Street and within the IT channel are frustrated by all the changes in direction. HP’s stock was down 47 percent during Apotheker’s watch as of Sept. 20, according to Bloomberg. But here’s the biggest problem of all: Each time HP has considered a strategic move under Apotheker’s leadership, the discussions have leaked out into the media. Certain folks — perhaps HP employees, or maybe HP board members — are undermining Apotheker’s authority.

The latest leaks occurred Sept. 21, when two sources told Bloomberg that HP’s board plans to consider firing Apotheker. Bloomberg speculates that Todd Bradley or Dave Donatelli (both of HP) could be in line to succeed Apotheker. Other potential candidates mentioned by Bloomberg include former eBay CEO Meg Whitman, Cisco Systems COO Gary Moore and IBM’s Steve Mills. The VAR Guy doubts Moore is on the short-list of candidates, though, since he was only recently named COO of Cisco and doesn’t appear to have CEO aspirations, our resident blogger has heard.

Admittedly, Apotheker has made some missteps. Apotheher has spoken about transforming HP into a software company and a cloud company. But some of Apotheker’s references have mentioned potentially competing with Apple iTunes, Amazon Web Services and other established brands. So far, there’s been nothing unique about Apotheker’s vision — other than it keeps changing. The only consistent item: Apotheker is recycling IBM’s strategic plan from the 1990s — deemphasize hardware, and push deeper into software and services.

Fix The Real Problem, HP

But here’s the real problem: Apotheker apparently doesn’t have a long time horizon to fix HP. Wall Street wants immediate answers. And each time Apotheker mulls a new move — before official decisions are made — the discussions leak out into the mainstream media.

The bottom line: HP’s board — led by former Oracle President Ray Lane — needs to make a statement about Apotheker’s status. Is he the long-term leader or will he be shown the door? Answers, please. Next, HP’s board has to take a hard look at itself and HP’s executive leadership team. One or more sources is spending far too much time leaking HP business plans to the media before the plans are finalized.

Neither Apotheker nor a potential successor can effectively lead under those circumstances.

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