HP's Problems Fall on Hurd, Fiorina, Board Chairman Says

Hewlett-Packard’s disappointing financial picture over the last two quarters has more to do with the tech giant’s previous two CEOs than current chief Leo Apotheker, according to the chairman of the company’s board of directors.

In an interview with Reuters July 26, Ray Lane, who came to the board about the same time Apotheker assumed the CEO position last year, said that deep budget cutting during the tenures of Mark Hurd and Carly Fiorina hindered innovation at HP, and that it will take time and investment to turn things around.

Improving things at HP is “not a three-month job,” Lane told Reuters. "Mark Hurd did not invest. He burned the furniture to please Wall Street. Leo is not that.”

Since Apotheker was hired in September 2010 to take the reins at HP, the company has seen its stock price slip and twice has cut company sales forecasts. He also has revamped HP’s executive management team—including removing such stalwarts as Ann Livermore and Randy Mott—and has pushed the company in new directions, including aggressively into the mobile-device markets on the strength of the webOS mobile operating system inherited through the acquisition of Palm.

Apotheker’s appointment came eight months after he resigned as CEO of software giant SAP following a financially difficult 2009. His hiring by HP generated mixed reviews among analysts, and some industry observers now are questioning whether he is doing right by HP.

However, Lane, a former executive at Oracle and currently a managing partner at investment firm Kleiner Perkins Caufield & Byers, said Apotheker is taking a different tack from Fiorina and Hurd, and focusing on the long term rather than sacrificing innovation for short-term results.

Fiorina was a volatile figure during her tenure as HP CEO, with the company’s acquisition of Compaq being her most controversial decision. During her time, HP also slashed tens of thousands of jobs, a record that was raised by opponents during her failed bid last year for the U.S. Senate in California. She was replaced by Hurd, who served for five years until he was forced to resign in August 2010 after questions arose about his personal conduct.

Hurd was hired a month later as president of Oracle.

Lane’s criticism of Hurd echoed comments by IBM CEO Sam Palmisano in September 2010, when he told the Wall Street Journal that it was Oracle, not HP, that had become Big Blue’s top competitor, due in large part to the continued investment Oracle CEO Larry Ellison was making in his products.

By contrast, Palmisano said HP was hurt by deep cuts in its R&D budget under Hurd, and that the company was losing relevance. He pointed to the bidding war between HP and Dell last year for storage software vendor 3Par, for which HP eventually paid $2.35 million. It was too high a price for the company, but given Hurd’s cuts of HP’s R&D budget that made it difficult for HP to innovate from within, the company had few options.

"HP used to be a very inventive company," Palmisano told the newspaper, indicating that he thought the company overpaid for 3Par. "[HP] had no choice. Hurd cut out all the research and development."