New HP CEO Whitman Commits To Hardware

Hewlett-Packard’s newly appointed chief executive, Meg Whitman has promised to invest in hardware, including PCs – but analysts are unsure of her experience in dealing with large enterprises.

Hewlett-Packard quickly introduced its new CEO, Meg Whitman, to an audience of press and analysts on a conference call, a mere one hour after announcing her appointment, and she promised to “execute” better, and invest in hardware.

Following a full day of speculation, Whitman replaced former CEO Leo Apotheker, who lasted 11 rocky months in the hottest of seats in the giant IT company, which employs 324,000 people globally.

Whitman, 55, (pictured) has served on the HP board since January 2011 and made her name in Silicon Valley as  president and CEO of eBay in a ten-year tenure that ended in 2008.

“We are fortunate to have someone of Meg Whitman’s calibre and experience step up to lead HP,” new executive chairman of the board Ray Lane, a former president of HP competitor Oracle, said in introducing Whitman.

“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.”

Track Record at eBay

Whitman was president and CEO of eBay from 1998 to 2008. During her tenure, the company grew from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in revenue. She ran for the governorship of California in 2010 on the Republican ticket, ultimately losing to former Gov. Jerry Brown after spending about $150 million of her own money on the campaign.

Whitman, however, has plenty more where that came from, having been listed by Forbes as the fourth-richest woman residing in the state of California with a net worth of about $1.3 billion.

Although she has experienced success in business throughout her career, Whitman has worked exclusively in the consumer sector and has never worked at or run an enterprise-focused company outside of her short time as a member of HP’s board. Although HP has extensive global consumer IT businesses involving PCs, printers, and other devices, its shift away from the consumer sector to a sharper focus on enterprise hardware, software and services does not align with her background.

Lane, asked about Whitman’s lack of direct experience in the enterprise hardware and software world, replied that “as an active member of our board for the past eight months, Meg has a solid understanding of our products and markets.

“It’s important to know, that as a CEO (at eBay), Meg was both a large purchaser of IT for the enterprise and ran a company that depends on technology to deliver its service. I was one of the suppliers of that technology to eBay (while at Oracle), and I watched her make decisions real-time when the company had tremendous success and also in crisis situations.”

Lane, Whitman, and CFO Cathy Lesjack all used the word “execute” or “execution” several times during the 40-minute call. Lack of key business strategy execution was cited by HP insiders, industry analysts and members of the IT press as clearly lacking during the previous CEO’s tenure.

“HP really matters. It matters to Silicon Valley, to California, to the United States, and frankly, to the entire world,” Whitman told the conference call audience. “Now I know that 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.

“We understand that our performance is under intense scrutiny. And we will take the necessary actions to get HP back on track. That isn’t something we can do overnight; it’s going to take time. It’s going to take a lot of hard work to bring all of the elements together. But I know we have the tools and people to achieve our goals.”

Whitman then addressed a question many people had on their minds about whether HP is ultimately going to shutter or spin off its Personal Systems Group, which Apotheker had wanted to do.

“HP will continue to invest in servers, storage, networking, printing, PCs and service offerings,” Whitman said. “We expect that by executing HP’s strategic actions, we will deliver greater value for our stockholders, broader solutions for our customers, and enhanced opportunities for our employees.”

Analysts hedge their bets

Mark Fabbi, a vice-president at Gartner, told eWEEK that there are definite pros and cons that come with Whitman’s appointment, as with any new hire.

“The ‘good’ is that it’s a permanent appointment, a key for any hire to avoid falling into HP’s recent shortcomings; she clearly has a better ability to articulate a strategy and be very clear about what she’s going to do; and she can expect to get better cooperation with the senior team,” Fabbi said. “Her comment about ‘recommitting to the hardware business’ is a key one.

“The ‘bad’ is that she doesn’t have experience of running a really big company, though not many have run a $100 billion company; and her experience is more consumer, while HP is clearly heading toward more of a enterprise focus.”

Overall, the board acted decisively and clearly knew what they needed to fix, Fabbi said.

“After the call, I’m more supportive. She knows what a number of the problems are and she certainly said the right things.  Now, we have to see how she gains exec support and re-gain confidence of the market, customers and employees,” Fabbi said.

Charles King, principal analyst at Pund-IT and a longtime HP expert, told eWEEK that “she’s obviously bright and able, and her position as an HP board director makes her a known entity.”

But her experience is mainly in consumer-facing services, and eBay’s size/complexity is a tiny fraction of HP’s, King said.

“More to the point, if the company continues its move toward enterprise IT software and services, who will be plotting that strategy? The other question is: What happens to Whitman’s political ambitions? I believe she’s said she intends to run for public office again,” King said.

“Overall, Whitman seems like a good ‘figurehead’ CEO who could help calm the market and shareholders, but I wonder how long she’d stay at the job.”