HP keeps strategy, names Whitman CEO

SAN JOSE – Hewlett-Packard named Meg Whitman its new chief executive, reaffirming strategic decisions made under former CEO Leo Apotheker but seeking a new leader to execute on them.

Ray Lane, named executive chairman of the HP board, defended both Whitman as the best pick for the job and the current HP board which has been widely criticized. HP also will seek a new lead independent board director.

Both Whitman and Lane said they continue to support decisions Apotheker announced August 18 to consider spinning out the PC business, to discontinue the WebOS tablet and smartphone business and to acquire server software Autonomy for an estimated $11.7 billion.

Whitman said the HP board is still evaluating whether to spin out its PC division and will decide before the end of the year. The Autonomy deal should also close by year's end, she said.

"In the end the only thing to rebuild confidence in this company is to deliver results and that is what I intend to do," said Whitman.

Lane said the board removed Apotheker for a lack of teamwork, a series of poor quarterly financial results and poor communications of strategic goals. He also defended the board against charges by Wall Street analysts it acted in haste given Apotheker's tenure of less than a year.

Lane declined to give a timeline for the board's action, but described it in broad terms.

"It wasn’t last week, it wasn’t a month ago," he said. "You don’t deliver a quarter and don’t deliver another quarter and then make some announcements [August 18] that are communicated poorly--how long do you go along with that?" he asked.

In addition to CEO candidates from last year's search which landed Apotheker, "there were several [internal] names we considered, but some were not ready," said Lane "I looked at an interim role, as did other board members, but I knew from the beginning that the strongest candidate was Meg.

"She is decisive and a people person," Lane said. "I predict HP employees will get on her side because she is going to get on their side really quickly," he added.

Lane also defended the board against widespread criticism for how it has handled a strong of issues with recent CEOs including Mark Hurd and Carly Fiorina. One reported said the board hired Apotheker last year although most of its members had not met him.

"I'm really proud of this board, I am proud of the individuals on this board and they way they work together," said Lane. "It is our operating execution that needs to improve and we made a decision in meg Whitman to lead us to that performance," he said.

"It's open season to write about this board, but this is not the board that was around for pre-texting and that fired Mark Hurd," he said, noting the HP board added eight new members in this year, including Whitman.

"This board did not select Leo, more than half this board is new since Leo," Lane said.  "This is a board that objectively debated whether he was the right person to run this business and we chose someone who has a track record of leadership," he said.

"I can't think of a name I would select outside Meg to lead this company," he added.

Whitman pledged to drive a decision on HP's PC business soon.

"The best thing we can do is get to a decision on PCs as fast as we can," she said. "It's not like fine wine and does not get better with time," she quipped.

"The vast majority of this company is still in the hardware business, and I want to make sure we underscore our commit to the hardware business," she added.

"If [the PC business] cannot be stronger on the outside to deliver better equipment and technology, it stays inside—the same is true of [its position for] investors," added Lane.

Krista Macomber, a research analyst at Technology Business Research, Inc. said HP should retain the PC business. "The synergies between PCs and the rest of HP’s business are positive, giving the company greater scale and allowing it to leverage its sales forces and partnership ecosystem," she said in a report.

Whitman said she has already met with top HP executives, but not rank-and-file employees. "The employees want to be led, this organization has been through a lot and they want very much for this company that is an icon in Silicon Valley to succeed," she said.