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HP dumps Apotheker for Whitman

'After careful and thoughtful deliberation'

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HP has named Meg Whitman as its new president and chief executive officer, parting ways with Leo Apotheker, who took the reins at the IT giant just ten months ago.

In a press release, the company also said that non-executive chairman Ray Lane – a partner at Silicon Valley venture firm Kleiner Perkins Caufield & Byers – is now executive chairman of the board of directors, and that it plans to appoint a lead independent director "promptly".

During a conference call with analysts and reporters, Lane said that the decision was made after "careful and thoughtful deliberation" by the HP board. "This board of directors cares deeply about Hewlett-Packard, and we are fully focused on doing what's right for HP and the future of this iconic company," he said. "The decision to change the leadership of HP is one the board took very seriously."

Reports had indicated that Whitman would replace Apotheker, and many were skeptical that the ex-eBay CEO and failed gubernatorial candidate was a suitable choice for the hardware behemoth. But in a canned statement, Lane sought to answer such criticism.

"We are fortunate to have someone of Meg Whitman's caliber and experience step up to lead HP," he said. "We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead. Meg is a technology visionary with a proven track record of execution.

"She is a strong communicator who is customer focused with deep leadership capabilities. Furthermore, as a member of HP's board of directors for the past eight months, Meg has a solid understanding of our products and markets."

On the conference call, Lane said that Whitman was prepared to handle a large hardware operation because, as the CEO of eBay, she was required to purchase large amounts of hardware. "I think it's important to note that as a CEO, Meg was a both a large purchaser of information technology for the enterprise and ran a company that depends on technology to deliver its service," he said. "I was one of the suppliers to eBay and I watched her made decisions realtime during a time of success for the company."

Last month, in a surprise announcement, HP said that it would discontinue its webOS smartphone and tablet devices, and that it may spin off its personal computer business. And yesterday, the web was abuzz with rumors that Apotheker would be dropped in favor of Whitman.

Whitman confirmed during today's call that HP is still considering a spin-off of the personal systems group, saying the decision would be made before the end of the year, if not sooner. She also said that the company continues to "explore its options" when it comes to webOS. This spring, HP talked of webOS as an operating system that would span not only smartphones and tablets but also desktops, laptops, and even printers.

Lane indicated that Apotheker was ousted in part because of the way the company "communicated" its decisions to shut down the webOS operation and consider a PC business spin-off. Whitman said she supported the decisions, but that she would "step back and take a hard look at this", saying she would "probably" have more to say during the company's next earnings call.

Asked why HP has so quickly named a permanent CEO rather than putting someone into an interim post, Lane said that the board had "fairly recent" data on outside candidates from the CEO search that was conducted prior to Apotheker's hire. The board considered "several" internal candidates as well as external candidates. Lane also said that he was considered for an interim role, but he indicated that he was the primary force pushing for Whitman's hire. "I have seen Meg work," he said. "She is decisive, and she is a people person."

Asked about the HP board – which has been heavily criticized in the press – Lane defended his fellow board members "straight from the heart", calling it a "new" HP board as he pointed out that five new members were appointed in January. "I believe in this board," he said, "It is our operating execution that needs to improve, and I believe Meg Whitman can help us do that."

He said that the current board "did not select" Apotheker as CEO. "This is a new board," he reiterated. ®

Update: This story was updated continually with additional information from HP's conference call.

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