Print 41 comment(s) - last by AssBall.. on Sep 22 at 6:21 PM

Léo Apotheker may be fired from HP only a year after being let go from SAP AG. He only last 10 months as SAP CEO, at HP he may only last 11 months.  (Source: n-TV/DPA)

Under Mr. Apotheker's leadership HP threw out its mobile device lineup.  (Source: Joe Zeff Design)

Under his leadership HP was preparing to trash its core personal computer business as well, spinning it off to focus on business software.  (Source: AP)
HP CEO's decision to cut the company up has the Board reportedly considering a pink slip for their chief

It must seem like déjà vu all over again for embattled Hewlett-Packard Company (HPQ) CEO Léo Apotheker.  According to Bloomberg, HP's board is considering parting ways with Mr. Apotheker only 11 months after they brought the German onboard.  

I. A Troubled Past

Just over a year ago, he sat before the board at German software maker SAP AG (
ETR:SAP), who were contemplating essentially firing him from that company's CEO spot.  At SAP, Mr. Apotheker lasted only 10 months.  During that time he steered SAP into its first loss in seven years, faced backlash for failed price increase attempts during the recession, clashed with unions, and allegedly oversaw the theft of intellectual property from Oracle Corp. (ORCL) that cost SAP $1.3B USD in damages.

In the end SAP opted to move ahead with the plan to get rid of the troubled leader, declining to renew Mr. Apotheker's contract and seeking a replacement.  Mr. Apotheker was forced to resign.  Soon after he packed his bags and head to a new home in California, and a new job as CEO of the 
world's largest computer maker, HP.  

Mr. Apotheker seemed an odd fit for HP, having had virtually no consumer hardware experience -- HP's biggest business segment in terms of unit sales.  The move seemed odder still, given his recent termination from SAP and lack of familiarity with the American business market.

II. Apotheker Looks To Cut Up HP

But for better or worse HP hired Mr. Apotheker to replace the departing Mark Hurd, who despite performing brilliantly from a business standpoint had been terminated by the board for sexual harassment accusations from a former contractor.  

For the first several months of his tenure Mr. Apotheker was remarkably quiet, though he slashed sales outlooks twice between November and June.  Then in August he dropped a bombshell, revealing that he was 
killing HP's first modern tablet the company's smartphone lineup, which it purchased from Palm, Inc.  Even more dumbfounding, he announced HP's intention to spin off its core PC business, which had long driven the image and sales.

Under his plan HP would essentially become SAP 2.0, focusing on the company's higher margin server and business software business.  To assist that goal, 
HP bid $10.3B USD on British software giant Autonomy, Corp. Plc. (LON:AU).  Many experts consider that bid several times what the company was really worth, and expressed astonishment that Mr. Apotheker's new firm would overpay that much.

The wild moves plunged share prices deeply downward, to the point where they're currently 47 percent lower than when Mr. Apotheker assumed his position.  It didn't help matters that HP cut its outlook yet again.

III. Fired Again? End of the Line May be Near

For many, Mr. Apotheker's approach to restructuring HP was seeming increasingly like the old comment by the wife of the former General Secretary of the Communist Party of the Soviet Union, Mikhail Gorbachev, that Gorbachev went about reforms like removing rotting leaves off of a cabbage and that by the time he was done, nothing was left.

Indeed some investors were wondering what would be left if Mr. Apotheker was allowed to transform HP from a consumer products maker into a would-be competitor to Oracle and International Business Machines, Inc. (

A former HP chairman remarked that HP was 
working to commit "corporate suicide".

Soon the shareholders had enough.  A group of shareholder 
recently filed suit against HP for Mr. Apotheker's wild moves, claiming he defrauded investors by failing to disclose his risky plans.  

The report that HP is considering Mr. Apotheker's dismissal closely files the news of that lawsuit, which was filed late last week.  Reportedly, the board is considering offering the CEO position to former eBay, Inc. (
EBAY) chief Megan Whitman on an interim, or even potentially long-term basis.

Ms. Whitman brings a decade of leadership as the CEO of the top internet auction site.  Under her leadership the company successfully went public and grew small business sales.  The company did reportedly overpay for Skype Technologies SA after getting in a bidding war with Google Inc. (
GOOG) and Yahoo! Inc. (YHOO), which led to criticism.  However, eBay did end up turning a profit on the purchase, when Microsoft Corp. (MSFTdecided to pay even more for Skype, boosting the return on eBay's remaining stake.  Otherwise the only real blemish on Ms. Whitman's record is her failure to reduce revenue declines at eBay.

Ms. Whitman has diverse executive experience, having worked at The Walt Disney Company (
DIS), Dreamworks, The Procter & Gamble Comp. (PG), and Hasbro, Inc. (HAS).  In January she joined HP's board after failing in her bid to become the governor of California.

At this point many investors simply say anyone would be better than Mr. Apotheker.  News of the potential leadership change has sent shares of HP stock soaring 9 percent today on the New York Stock Exchange.

If Mr. Apotheker departs, there's a strong possibility that he'll take with him the plans of the spinoff.  A webOS revival could even be in store, though that may be unlikely 
given recent layoffs.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

Multiple Personality Disorder
By The Insolent One on 9/21/2011 6:56:39 PM , Rating: 2
HP needs to figure out who they want to be.

Do they want to be in a high margin industry like software and services with lower revenues? Or do they want to be in a market like PCs with high revenue and low profit margins?

With the margins from hardware being reported as 5% or less, it's not a horrible idea to move up-market. However, there are going to be a lot of ruffled feathers along the way.

Since PCs are a commodity market, it's most efficient to leave that type of product for those that can produce at the lowest cost.

I'm no fan of Apotheker, but he's trying to move HP away from the past by going to software & services. That's where the margins are... if you have a product to sell.

The big problem for HP is that they're not known for software & services so they have a lot of building to do to get there.

I know one thing...Meg Whitman does not belong there. She did a horrible job at eBay, but it seems a lot of people have a short memory.

This will be a fun one to watch. Who can look away from a trainwreck?

RE: Multiple Personality Disorder
By Taft12 on 9/22/2011 3:22:38 PM , Rating: 2
The big problem for HP is that they're not known for software & services so they have a lot of building to do to get there.

What? They are already one of the biggest enterprise vendors on the planet. ProCurve, HPUX, Proliant, ... Does any of ring a bell?

They bought EDS for $13 billion!

Pay attention people!

"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki