Investors showed their concerns about board strategy at Hewlett-Packard by sending shares down more than 5 per cent on Friday after the company named Meg Whitman as its third chief executive in a year.
The former Ebay chief executive took over from Léo Apotheker, who served less than a year at the top of the world’s largest computer maker by revenue.
A consensus among the board had emerged over the past week that Mr Apotheker needed to go and that Ms Whitman, an HP board member since January, would be the best successor, according to people close to the process. The board also named chairman Ray Lane as full-time executive chairman.
HP’s stock has fallen by half since February and the decline accelerated last month when Mr Apotheker announced a $10.6bn purchase of UK software maker Autonomy and said HP would probably spin off its personal computer business. Shares were down to $21.63 in morning trading in New York.
Each of those moves had some support from investors and board members who feel that the company should move toward software and services. HP is not expected to reverse the Autonomy bid, which would be difficult in any case under UK laws, or the spin-off decision.
The core problem for some directors was Mr Apotheker’s execution and leadership. Cutting financial projections three times during his tenure alienated shareholders and he soon lost the initial goodwill he enjoyed from executives and other employees, people inside the company said.
Mr Apotheker, the former chief executive at business software maker SAP, told the head of HP’s PC division of the planned spin-off only days before the August announcement. Other top executives learnt of critical moves, including the impending change in chief executive, through the media.
The HP board is also coming under renewed fire from investors, after facing criticism last year for dismissing Mark Hurd as chief executive. Directors cleared Mr Hurd of a contractor’s sex harassment claim but lost faith in him during the inquiry.
“That the board would be considering a change in CEO less that 10 months after Apotheker took over as CEO is a damning indictment of not just the new CEO, but also the board itself”, said Carter Lusher, chief analyst at Ovum. “Having approved the recent strategy changes, it seems spineless for the board just a month later to be potentially jettisoning that plan and its architect.”
Although she earned fame and fortune for leading Ebay between 1998 and 2008, Ms Whitman is a far from obvious choice to run HP, Mr Lusher and other technology experts warned. Ebay caters almost entirely to consumers, while the core of HP’s customer base is big businesses.
A former management consultant and Hasbro toy company executive, Ms Whitman is known for internet prowess but not broader technology expertise.
Last year, Ms Whitman ran for governor of California as a Republican candidate, but lost.
HP shares gained on anticipation of the chief executive change on Wednesday, then lost much of that ground on Thursday. They fell more than 5 per cent, slightly more than battered US indices.