PALO ALTO, Calif. ― Hewlett-Packard Co’s board convened on Wednesday to consider ousting CEO Leo Apotheker after less than a year on the job and replacing him temporarily with former eBay CEO Meg Whitman, a source familiar with the matter said.
HP’s board of directors — facing shareholder lawsuits and intensifying criticism from investors — is thrashing out a host of issues, including whether to name Whitman as the interim CEO, the source told Reuters.
The storied Silicon Valley giant is fighting to restore its crumbling credibility. During his 11-month tenure, Apotheker slashed sales forecasts repeatedly, backtracked on promises to integrate Palm’s webOS software into devices, and struggled to halt a 50 percent plunge in the share price.
No decisions have yet been made about leadership, the source said on condition of anonymity because of the sensitivity of the issue.
Wall Street roared its approval, sending HP shares up 6.6 percent to close at $23.96, a gain of $3 billion in the company’s market value.
If Apotheker is let go, he would be the third CEO in a row to be ousted by the board of the largest U.S. technology company by sales.
Analysts say the odds may have been stacked against Apotheker from the beginning. Venture capitalist Ray Lane, who this year assumed chairmanship of an often-lambasted but powerful board, has argued that previous management underinvested in areas including software and services.
“He was doomed from the beginning,” said Ticonderoga Securities analyst Brian White. “The die was cast for whoever stepped into that position.”
Investors seemed to approve of Whitman, a billionaire who joined HP’s board this year on an interim basis after a failed bid to become California’s governor.
Apotheker, former CEO of German business software maker SAP AG, was a surprise choice to replace the popular Mark Hurd, himself ousted last year after a scandal involving expense reports and a female contractor.
Before Hurd came Carly Fiorina — like Whitman, a candidate for California political office — whom investors blamed for betting on a sunset PC industry by buying Compaq. She was eventually fired by the board.Now, HP is grappling with withering criticism from Wall Street — and a raft of shareholder lawsuits — over recent strategic decisions and the haphazard way in which they have been communicated.
In August, it confounded investors by killing off a much-touted line of mobile devices including the TouchPad and declaring it may spin off its massive PC division. Apotheker also spearheaded a deal to buy British software maker Autonomy that many considered too costly.
The potential loss of HP’s main public face raises questions about those pivotal strategic shifts, and has even triggered speculation the board might do an about-face on some of them.
Especially rankling to investors had been a decision to fork over close to $12 billion for Autonomy, without clarifying how the niche maker of cloud-computing software would fit into or help drive a sprawling empire that spans computers, printers, software and enterprise IT solutions.
“If (HP) fires Apotheker, cancels Autonomy deal, and keeps PC division, it’ll be great for the stock — and every director should be arrested,” outspoken hedge fund manager Eric Jackson said on Twitter in reaction to the news.