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. (IBM).
A former HP chairman remarked that HP was working to commit "corporate
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
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. (MSFT) decided 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.