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By Jeffrey Burt  |  Posted 2005-02-09 Print this article Print

During the conference call, Dunn said the board is comfortable with the direction of the company, but it felt a leadership change was needed. "This is not a change related to strategy," Dunn said. "Its a change due to the decision to accelerate that strategy. … The board reviews the companys performance and leadership performance … and concluded that a change now is in the best interest of the company."
Dunn said Fiorina and her leadership team turned around the company "in remarkable fashion" and that she did a good job steering the Compaq acquisition, but the board believed a new person should be brought in to take the HP forward.
For the past few years, one of the key issues debated in the industry has been whether HP should spin off a part of its business—in particular, the Imaging and Printing Group—to give HP a better focus. During a meeting with financial analysts in December, Fiorina said the board over the past few years had addressed that issue at least three times, and each time decided against it. Fiorina and other executives said one of HPs strengths was its large portfolio of products, giving customers a single place for most of their IT needs. During Wednesday mornings calls, Wayman and Dunn said they didnt anticipate any changes in that stance, saying the board is comfortable with the current portfolio. "We have a unique portfolio, one that is stronger together than apart," Wayman said. The issue came down to growing the companys offerings. "The portfolio assembled at HP is unique," she said, adding that it is "a collection of businesses that have the ability and, indeed, the expectation of performing along with the best in class in their market in products and services." That has been a key issue for HP, which has positioned itself to compete on a number of fronts. In servers, analysts say it is being squeezed by IBM on the high end and Dell Inc. on the low end. In the highly commoditized PC market, it has been battling Dell for the top spot for several years, although in recent months executives have said they are willing to trade market share for profits. Dell also has entered the printing business, HP services run up against IBMs massive IBM Global Services unit, and the companys push into consumer electronics runs it up against such established vendors as Sony Corp. HP is expanding its presence in the living room with an HDTV media hub and high-definition TVs and home projectors. Click here to read more. Wayman was reluctant to talk specifically about various business units, but did say that the PC business, which had lost money for several quarters after the Compaq merger, had been profitable over the past few quarters, though more was expected of the unit. He also said that on the enterprise side, the storage business had been "a significant disappointment last year"—losing money and market share and falling behind on product road maps—and that "we need to ensure that we have a management team and set of management policies to make sure that doesnt happen again." Neither Dunn nor Wayman would comment on the qualifications the board is looking for in the next CEO, although Dunn did say the new CEO would be expected to be "more hands on" in executing the companys strategy. They said all candidates—both inside and outside the company—will be considered, although Dunn hinted that the expectations are that the new CEO will come from outside. Internally, two top candidates appear to be Ann Livermore, executive vice president of the Technology Solutions Group—which includes enterprise hardware and services—and Vyomesh Joshi, executive vice president of the Imaging and Personal Systems Group. Livermore had been considered a candidate for the CEO job before Fiorina came on board from Lucent Technologies Inc. In a statement, the board of directors said it will immediately start a search for Fiorinas replacement. Dunn said that no potential candidates have been contacted yet. "We brought Carly to the company to execute a major transformation impacting the companys [culture] and portfolio," Dunn said. "We think she did an outstanding job. … The companys a different one than the one Carly found six years ago." What needs to be done now, she said, is to push that portfolio forward. Editors Note: This story was updated to include comments from Dunn and Wayman. Check out eWEEK.coms for the latest news in desktop and notebook computing.


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