HP's Whitman Needs to Reassure, Make Hard Decisions: Analysts

Hewlett-Packard's new CEO, Meg Whitman, needs to reassure investors and customers and then make some hard decisions, according to analysts.

Hewlett-Packard now finds itself in the midst of yet another CEO transition. Its stock and financial forecasts have declined in the past few quarters. Departing CEO Leo Apotheker attracted significant criticism for his strategy of remaking HP as a business software-and-services company, and incoming executive Meg Whitman now has the unenviable job of steering the whole enterprise back on course.

"What is most important now is assuring HP's many customers and partners as well as employees that the company can continue to be trusted," Ezra Gottheil, an analyst with Technology Business Research, wrote in a Sept. 22 research note. "It is important to bear in mind that HP remains a successful company; it is profitable and growing in a difficult economic climate."

If Whitman can reestablish trust in HP, Gottheil believes the next necessary step will involve retaining the PC business, which the company originally intended to spin off as part of its broader strategic realignment. "This uncertainty about its PC strategy undermined consumer and partner confidence in HP's PC business and in its hardware business as a whole," he wrote. "We believe assuring customers it will retain and nurture its PC business is HP's most logical and likely course of action."

According to another analyst, Whitman's first priority is much more immediate: Plugging the high-level information leaks that have bedeviled HP over the past few months. That involves, apparently, firing the company's entire board of directors.

"Information trickles out of it just as freely as it ever did," Roger Kay, principal analyst of Endpoint Technologies Associates, wrote in a Sept. 23 blog posting. "This is no way to run a merchant fleet."

Whitman "should clean house," he added. "Rather than threaten, cajole, wheedle, charm, persuade or fiddle with existing board members, she should ask them all for their resignations."

Whatever her eventual decisions, reports indicate that Whitman, former eBay head and HP board member, intends to remove some of the uncertainty regarding HP's PC business. According to a Sept. 23 report in The Wall Street Journal, she'll make a decision about that division by the end of the year.

Whether she retains HP's newfound focus on enterprise software and services is also a significant question. HP is in the midst of digesting software maker Autonomy, a $10 billion acquisition that Apotheker made in order to boost HP's enterprise software portfolio.

In any case, the CEO switch "would be a tactical move in a company that desperately needs a strategic one," Rob Enderle, principal analyst for The Enderle Group, told eWEEK Sept. 21. "If it is going to make a change, this one needs to be handled better and remain in place long enough for HP to be seen as stable again or the firm is likely to start slipping again very shortly."

No pressure, folks.

Follow Nicholas Kolakowski on Twitter