The CEO and Chairman of HP was (essentially) fired by the Board of Directors, yesterday. Today, the newspapers (especially here in the Silicon Valley) are filled with stories about the whole Carly episode. How she was such a superstar CEO who just couldn’t deliver the financial results. She always over-promised and under-delivered. Etc.
A couple of interesting trivia. After Carly’s departure, there are only 15 women left who are CEO’s of a Fortune 1000 company. Also, Carly’s severance package is estimated at $21 million.
The race for successor is on. Chances are it will be an outsider. Current MCI CEO is tipped as an early favorite. The HP CFO is currrently the interim CEO.
Yeh tow hona hee thaa… heving heard Carly in person at a seminar, I gotta say that she’s the most confident and convincing lady I’ve ever come across… but business analysts agree that although she had the leadership style… she just failed in executing her strategy.
To start with, her controversial merger with Compaq in 2002 faced major opposition esp. from Walter Hewlett… and I guess his views have just been vindicated by the recent turn of events.
The merger didn’t solve any of HP’s problems… it just added Compaq’s to its own. Post-merger, HP could have done a better job in marketing its products, and squeezing its costs… but the shareholders didn’t have the patience for things to catch upto speed cuz IBM and Dell have been doing a lot better.
I dunno how things for HP are gonna go hereon. They’ve always wanted to break up into two companies… one focused on corporate customers and the other for the consumer side of things… but Carly had always opposed this…
I guess HP can look for someone to buy out its PC business like IBM did with Lenovo… but with the merger, HP now has not only its own but also Compaq’s assets.
Dekho kya banta hai - rest assured, she doesn't need a job if she wishes to do so :)
Actually, HP insiders apparently want the printer business to be spun-off. Its a cash cow for the Company. The server line is apparently the worst performer.
ps. She is 50. Dunno if she will want to get another job. She may become an enterpreneur. Doesn't look like the kind of person who sits on her behind as a retiree.
^ Actually that was the main purpose of acquiring Compaq. Sadly the results don't speak for a success. HP's market share in server market is down and down.
Kaleem, I’m not sure if things have changed much in the last four/five years – but back then, when I was on the procurement team for a large government project, we had a hard time justifying to stay with Compaq for our server needs even though we had a long term agreement with them for our desktop requirements. In the end we opted for the IBM Netfinity line at the time, and those were sweeeet machines (at the time)
I can hardly see HPQ compete actively with the likes of IBM x-series, and Dell Itanium and Blades which have recently come closer to second place right besides Sun Microsystems in the overall Server market race.
I shorted HPQ today. There is no way any one can turn this company around. The BoD are a bunch of old farts who blame all failures on the CEOs. They made a big mistake when they kept Fiorina and let the other guy go and now made a bigger one by letting her go. They are fools if they think anyone can have a turnaround like IBM's by changing management. It is just a bad time for this business and it is best to stay out of it.
Carly will come back, not to HPQ, but as a CEO for another company.
The problem with her was the singular belief of verticalizing the business. The commoditization of products in th ecomputer industry happens so fast that you are always playing catch up to that business strategy. I think they need to do a couple of carve outs of their non-strategic businesses and regain focus on core competency.
Associated Press
** With New CEO, HP May Face Major Shift **
Friday February 11, 7:29 am ET
By Matthew Fordahl, AP Technology Writer
With New Chief Executive, Hewlett-Packard May Face a Major Shift in Strategy
SAN JOSE, Calif. (AP) – The next chief executive of Hewlett-Packard Co. will need to decide whether to stick with Carly Fiorina’s two-pronged strategy of trying to beat the company’s rivals in what they do best – IBM in premium computers and services, Dell in business and consumer systems.
Or the Silicon Valley icon could effectively concede defeat in its current multifront war and break itself apart into separate businesses that can focus their employees, management and research resources on specific markets.
After showing Fiorina the door this week, HP’s board made its near-term intent clear: It wants to keep the strategy but change how it is executed. “The board is firmly committed to the business strategy that is in place,” said Patricia Dunn, HP’s new non-executive chairman.
Chief Financial Officer Robert Wayman is serving as interim CEO until a successor is named.
Though HP is giving no hints as to a permanent successor, observers have mentioned Michael Capellas, the current MCI Inc. CEO and former Compaq chief who helped arrange 2002’s HP-Compaq merger, and Ed Zander, the former Sun Microsystems Inc. president who now heads Motorola Inc.
It’s possible, but less likely, the new CEO will be pulled from HP’s ranks. Possibilities include Ann Livermore, who heads HP’s enterprise business, and Vyomesh Joshi, the printer division chief who was recently named to head the combined imaging and PC businesses.
Regardless of who is named, the new leader must face hard facts about HP’s growth and overall performance since Fiorina embarked on reinventing HP in 1999, particularly fallout from the $19 billion Compaq merger and its unimpressive stock price over the last several years.
HP, No. 11 in the Fortune 500, now finds itself in the position of trying to sell low-profit, commodity products while at the same time trying to be a respected player in the high-end businesses.
It’s not doing spectacularly well in either as its bottom line has been propped up by its printer and ink business.
“What it boils down to is HP is trying to do a straddle, and ends up as the filling in the sandwich of two competitors,” Frank Gillett, a principal analyst at Forrester Research, said Thursday.
The HP board considered breaking up the company on three occasions but rejected the idea each time, Fiorina said at an analyst meeting two months before her ouster.
Most often mentioned as a spinoff candidate is HP’s imaging division, which leads the printer market and brought in 73 percent of HP’s operating profits and 30 percent of sales in the fiscal year ended Oct. 31.
But such a move would be difficult given last month’s decision to combine the unit with HP’s inconsistent personal computer division, which attempts to compete against Dell Inc., the industry leader well known for its efficient, high-volume business.
In fact, HP’s acquisition of Compaq was intended to give it the volume and efficiency to beat Dell. At the time, critics warned that the company was diving deeper into a losing business. Sun Microsystems CEO Scott McNealy likened it to a collision of garbage trucks.
Since the contentious deal closed, HP and Dell have swapped position as the No. 1 PC maker in terms of global shipments. But Dell has remained consistently profitable while the HP unit has not.
Another reason not to split: There may be new opportunities for innovation in PCs, especially those that are designed to control living room entertainment centers, act as home servers and do other high-end work around the house. HP has already seen success with so-called Media Center PCs and is planning to launch additional products.
“The recent ‘sale’ of its PC unit to the company’s imaging division seems to us to signify a belief that PCs are a vital opportunity for HP to enter the living room with advanced computer technology,” Mark Stahlman, a Caris & Co. analyst, wrote in a research report.
But there are other signs that the personal computer business may not have much potential as a growth engine, as evidenced by International Business Machines’ recent $1.75 billion deal to sell its PC division to China’s Lenovo Group Ltd.
IBM clearly sees its future in higher-end technology. And while it’s leaving PCs, it isn’t abandoning the market entirely. In fact, IBM is one of the three developers of a premium chip that power the next-generation Sony PlayStation 3 and another that will be used in Microsoft Corp.'s Xbox. Both will compete head-on with PCs for the living room.
Big Blue’s big moneymaker, however, will continue to be in selling both hardware, software and services to companies, governments and other organizations. It’s here that HP must persuade customers that it’s both a premium provider, even though it also sells commodity products.
“The basic challenge is how do you convince someone that one brand and one organization can do what appear to be diametrically opposite things,” Gillett said.
HP could differentiate itself by taking a middle-ground – separate from IBM’s full-service approach and Dell’s do-it-yourself mantra, he added.
Ultimately, business computing could turn out to be a growth engine – and that’s ultimately what HP needs most.
Given Wednesday’s statements by board members, it appears unlikely that any dramatic strategy shifts such as a corporate breakup are likely.
“It’s plausible that they will give themselves one more shot at the current form of HP,” Gillett said. “If they can’t make it work with a new CEO within roughly 12 to 18 months, then it really is time to reset on that idea.”
Shares of HP fell 5 cents to close at $21.48 Thursday trading on the New York Stock Exchange.
