PALO ALTO, Calif. -- Hewlett-Packard on Sept. 22 fired CEO Leo Apotheker, the man it had selected to lead the company into the 21st century, after 11 months on the job.
HP's embattled board of directors immediately installed one of its newest members, former eBay CEO Meg Whitman, 55, to replace Apotheker on a permanent basis. It had been widely speculated that whoever replaced Apotheker would do so in an interim role.
HP, the world's largest IT company by sales volume, whose rock-solid administrative reputation for 60 years has turned simply rocky in the last decade, is shifting away from the personal computing sector to focus on the more profitable enterprise software and services markets. Apotheker, 58, who came to HP from German enterprise software maker SAP with great fanfare in September 2010, turned out not to be the person to lead the way.
Apotheker was fired because of "his poor execution and a lack of leadership," a source told The Wall Street Journal.
Former Oracle President and current venture capitalist Ray Lane has moved from non-executive chairman to executive chairman of HP's board of directors, and the board intends to appoint a lead independent director promptly, HP said. With the exit of Apotheker, the HP board now has 13 members.
Whitman (left) joined the board in January 2011 with four other new directors after losing the previous November to former Gov. Jerry Brown as the Republican candidate for governor of California. She becomes the second female CEO of the company. Carly Fiorina, who ran unsuccessfully on the Republican ticket for the U.S. Senate seat held by incumbent California Democrat Barbara Boxer, served as HP's CEO from 1999 to 2005.
The news came two days after HP announced that is starting layoffs of as many as 500 workers in its webOS division, after stating a month ago that it was shutting down that operation. However, a source at the company told eWEEK that the pink slips are now being withheld until "further notice."
The HP board also is reconsidering its Aug. 18 announcement that it will spin off or shutter the company's market-leading PC business, sources with knowledge of the company told eWEEK.
Great Ups, Downs in Short Tenure
Apotheker (pronounced Appo-tecker) had seen great ups and downs during his brief time at HP. On his watch in February 2011, HP launched its first tablet PC (the TouchPad) and two smartphones (the Pre3 and Veer), all of which run on the webOS system HP inherited when it acquired Palm Computing for $1.2 billion in 2010.
At that time, Apotheker (right) announced that HP had decided to propagate the webOS to every computer it makes -- laptops, desktops, servers, storage arrays and printers -- and that the webOS would run "alongside" Windows, Linux and other operating systems. But it was never made clear exactly what that potential OS handshake would do to improve the devices.
After the TouchPads and phones came into the marketplace in July 2011 and didn't sell well, Apotheker replaced Jon Rubinstein, head of the webOS group, on July 11 and announced it would pull all the webOS computers and phones from the market. HP then decided to lower the price of the TouchPads to $99, and they promptly became the best-selling such device on the market until they sold out.
Meanwhile, the stock price continued to tank. Later, on Aug. 18, Apotheker announced at the company's quarterly earnings conference call that HP had decided to do away with the webOS division entirely, as well as the long-established and highly successful Personal Systems Group, which recorded $41 billion in sales in 2010.
Largely as a result of all this uncertainty, HP saw its stock price plunge by as much as 47 percent while it cut revenue forecasts at least three times. At the same time, Apotheker proactively tried to shift HP's focus to software, announcing that it was going to buy infrastructure software maker Autonomy for $10 billion to boost its enterprise software portfolio in search, content management and several other areas.
Although the Autonomy transaction has not yet closed, it likely will be consummated despite the change in leadership.