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September 23, 2011 12:08 am
A key part of the new strategy with which Léo Apotheker had hoped to reshape Hewlett-Packard may not survive his departure as chief executive, to judge from comments made by the company’s new leaders.
In announcing a change at the top for the world’s biggest computer maker, Meg Whitman and Ray Lane, the duo of former non-executive directors who are now at the helm, paid lip-service on Thursday to the strategic changes announced by Mr Apotheker last month. Wall Street’s knee-jerk reaction to his moves wiped 20 per cent from HP’s share price and precipitated the boardroom coup that sealed his fate.
However, Ms Whitman and Mr Lane also indicated that they had a more open mind about a key part of that new strategy – the potential spin-off of HP’s personal computer division into a separate company – and promised a quick review to end uncertainty surrounding the business.
The attempt by HP’s new leaders to leave room for a revision of the strategy they had voted for as directors barely a month before left some Wall Street analysts sounding sceptical about whether the company would stick to its earlier plans.
“I am supportive of the actions that were announced on August 18th,” Ms Whitman said, referring to the disastrous unveiling of Mr Apotheker’s plan. “But since I am now CEO, I will review a number of the strategic initiatives, and I will obviously surface with my point of view on this.”
Foremost among the issues up for review is the fate of HP’s PC division, she and Mr Lane said. While Mr Apotheker had made it clear that he preferred a spin-off of the business, Ms Whitman said in an interview with the Financial Times: “I don’t have a preconceived point of view. I want to hear what customers say. I want to see the data.”
Speaking to investors and analysts, Mr Lane added that HP was also prepared to reverse course to appease Wall Street. “If investors think they will benefit from [retaining the PC division], it will be the easiest decision we will ever have,” he said.
“They were clearly rethinking and backtracking,” said Gartner analyst Mark Fabbi. “With the big relationship that they have with Intel, which supplies chips for both consumer and enterprise [machines], they may be deciding that it makes more sense to keep it part of HP.”
HP’s new leaders also sought to stem the potential damage to the PC division from the uncertainty about its future. While Mr Apotheker had said that it might take up to 18 months to spin the division off, Ms Whitman promised a decision “by the end of the calendar year, if not sooner”, adding: “This decision is not like fine wine – it will not get better with age.”
In another apparent departure from Mr Apotheker, the new HP bosses played down the significance of the company’s pending $10.6bn acquisition of Autonomy, rejecting the former CEO’s claims that this would help to “transform” HP into a business that was far more dependent on software.
“I want to underscore our commitment to the hardware business,” Ms Whitman said, as she promised continued investment by the company into its full range of businesses, including PCs.
One of the company’s largest investors privately expressed displeasure with the high price that HP had agreed to pay for Autonomy and said his firm had made its unhappiness clear in meetings with the company. However, UK takeover regulations making it almost impossible for companies to back out on firm takeover commitments, according to merger and acquisition experts, and Ms Whitman said the Autonomy deal was “proceeding as planned” and likely to close before the end of the year.
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