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HP insists Whitman is new broom to clean up execution

Damns Apotheker with faint praise

With HP’s latest quarterly earnings looking so poor, you’d expect the traditional financial analyst’s call to be dominated by concerns on the minutiae of performance. But every question was on leadership.

HP’s chairman Ray Lane said that the company had been “jolted” by the departure of Mark Hurd, and the board had made the decision to hire Léo Apotheker to develop a new strategic mission for HP. The decision to fire him less than a year later was “absolutely necessary,” he said, while adding that Apotheker had made “important contributions,” to the company.

Lane later said that the board had become concerned over three areas of his performance. The company needs an executive team that works together he said, but “ad-hoc witnessing” showed no evidence of this. The biggest problem, however, was operating execution and understanding the dynamics of business. Apotheker also failed on clear communication of HP's corporate objectives.

Whitman’s main task, he made clear, was to improve the operational performance of HP and develop a strategy to go forward. HP had been starving its research arm for many years and the company had been falling down on operations he said. Whitman promised to be a new broom to the company and reassert it on the global stage.

“HP really matters – it matters to Silicon Valley, California, to the US and, frankly, the entire world,” she said. “HP has disappointed investors in recent quarters and we’re not happy about it. Going forward HP will have no higher priority than to do everything in our power to meet the challenges of today’s macroeconomic environment and, frankly, improve our operational and financial performance.”

Lane also asserted that the new broom effect extended into HP’s board, which has been much criticized for its handling of the company over the last decade. In January he had added five new board members to HP and the company would be taking a long, hard look at itself he promised.

“This is not the board that was around for pretexting, this is not the board that fired Mark Hurd,” he said. “This board did not select Léo. More than half of this board is new after Léo.”

On the proposed spin-off of the personal systems group the board hoped to make up its mind “by the end of the calendar year, if not sooner,” Whitman said. Lane asserted he had pushed for a spun-off PC line with an HP brand but the board had disagreed. That was still his desire he said, but if they could do a better job internally then it would stay part of HP.

Given the exclusive focus of financial analyst’s questions, it’s clear that Wall Street is less than sold on Whitman as the long-term boss at HP. Lane is obviously keen to convince, but Whitman’s future depends on getting the core operations conundrum sorted. ®

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