August 6, 2021

Hewlett-Packard Board Expected to Fire C.E.O.

The leading candidate to replace H.P.’s chief, Léo Apotheker, was Meg Whitman, the former chief executive of eBay, who was sought for her ability to run a large technology company, said the people, who asked for anonymity because they were not authorized by the board to speak publicly.

With the move to fire its third chief executive in a row, Hewlett-Packard risks looking like the tech company that cannot find its way. It is one of the oldest and most successful tech companies and yet in recent years it has been surpassed by far more innovative and better-managed companies like Google, Apple and Facebook in symbolizing innovation in Silicon Valley. The question facing H.P. is whether a new chief executive can restore its leadership position.

On a day last month that crystallized the company’s careening strategy, Mr. Apotheker made a series of announcements: poor quarterly earnings; an $11.7 billion purchase of Autonomy, a British software company that analysts immediately branded as overpriced; discontinuation of its TouchPad tablet and its WebOs software that had been introduced only months before; and the possible sale or spinoff of H.P.’s mainstay PC business. The stock lost about a quarter of its value on the news.

The company’s stock has fallen 47 percent, a loss of over $40 billion in the company’s market value, on Mr. Apotheker’s watch.

Investors liked the prospect of new leadership. Hewlett-Packard’s stock was up 6.72 percent Wednesday to close at $23.98. It was not clear, however, that Ms. Whitman could undo much of what Mr. Apotheker had done or for that matter whether H.P.’s board would want her to. Analysts say it would be difficult for the company to walk away from the Autonomy bid, though the board may be considering hanging on to the PC business.

Ms. Whitman, who ran eBay as it grew from a start-up to a major online retailer, left the company just as growth began to stall. She unsuccessfully ran for governor of California and was hired in March by Kleiner Perkins Caufield Byers, a venture capital firm, as a strategic adviser.

The board conversations about Ms. Whitman are fluid, though, and might not result in her hiring, this person said. However, if Ms. Whitman were hired, she would most likely be a permanent, not an interim, replacement for Mr. Apotheker, said a person briefed on the board’s discussions who asked for anonymity because he was not authorized by the board to speak publicly. While she lacks experience running a technology company as complex and mature as H.P.,  the company’s board considers her communications skills and understanding of customers to be her strongest qualifications for the job, this person said. Ms. Whitman joined the H.P. board in January, several months after Mr. Apotheker was hired. 

Although H.P.’s board is comfortable with the strategy laid out last month by Mr. Apotheker, its members have increasingly begun to raise questions about his ability to communicate that strategy effectively within the company and to outsiders, especially investors.

Last week, H.P. was hit with a lawsuit claiming that its executives misled investors about the health of the company, including its PC and mobile device business, before its recently announced strategy shift.

Some outside observers see the board itself as the problem. Since naming Carly Fiorina chief executive in 1999, H.P. has endured proxy wars with some of its founders’ children over the merger with Compaq; board room squabbles that culminated in Ms. Fiorina’s ouster; scandals involving spying on journalists, its own employees and board members; and the firing of Mark V. Hurd, for expense account irregularities involving a female contract employee.

“This is a decade-long drama that the board has let unfold,” said George F. Colony, chief executive of Forrester Research. “They have shown some dysfunction in the past, and had difficulty coming to consensus.” For some board members, he said, Mr. Apotheker’s tenure “was too much change.” Mr. Apotheker, 58, a soft-spoken, unassuming executive, oversaw a year of tumult at H.P., which reported $126 billion in revenue in the fiscal year that ended in October 2010. By some measures, it is the largest technology company in the world.

Even though he had not lasted long as chief executive of SAP, a large German software maker, the board quickly hired him to replace Mr. Hurd.

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Video Game Products Lift Microsoft in Quarter

SAN FRANCISCO — A slowdown in personal computer sales hurt Microsoft’s quarterly earnings, but the software company made up for it with strong sales of its Kinect and Xbox video game products.

Microsoft reported Thursday that net income in its third quarter rose 31 percent to $5.23 billion, or 61 cents a share, from $4 billion, or 45 cents a share, in the quarter a year ago.

Revenue climbed 13 percent to $16.43 billion, from $14.5 billion.

A survey of analysts by Thomson Reuters had forecast net income of 56 cents a share and revenue of $16.19 billion.

“We delivered strong financial results despite a mixed PC environment, which demonstrates the strength and breadth of our businesses,” Peter Klein, chief financial officer at Microsoft, said in a statement. “Consumers are purchasing Office 2010, Xbox and Kinect at tremendous rates, and businesses of all sizes are purchasing Microsoft platforms and applications.”

The company, based in Redmond, Wash., said that quarterly revenue for the unit that includes Office word processing, spreadsheet and presentation software, grew 21 percent to $5.25 billion. Office 2010 is the fastest-selling version of Office ever, Microsoft said, with businesses deploying the software at five times the rate of its predecessor.

However, revenue from the division that includes the Windows operating system fell 4 percent to $4.45 billion.

Microsoft’s entertainment and devices, which includes the Xbox 360 video game console, Kinect game controller and the Zune music player, gained 60 percent to $1.94 billion. Kinect, a sensor that lets players interact with video games without having to hold a controller, did particularly well, selling 2.4 million units in the quarter. Customers bought 2.7 million Xbox 360s.

Meanwhile, sales of computer server software, used in corporate data centers, increased 11 percent to $4.1 billion.

Revenue from Microsoft’s online properties like the MSN portal and Bing search engine rose 14 percent to $648 million. The unit lost $726 million in operating income, continuing a pattern of losses.

Two years ago, Microsoft signed an agreement to take over Yahoo’s search business to create a more formidable rival to Google. However, Yahoo’s chief executive, Carol A. Bartz, said last week that the partnership had not yielded the expected financial results for Yahoo and that technical glitches by Microsoft were to blame.

Downbeat reports about personal computer shipments in early 2011 had raised questions about Microsoft’s future dominance. Microsoft has developed an operating system for smartphones, but it is on relatively few phones. It does not have software that makers of tablet computers want. Japan’s earthquake and consumer appetite for tablets caused computer shipments during the first three months of the year to decline 3.2 percent, according to IDC.

But subsequent to the reports, Intel posted strong earnings that cast doubt on slumping computer sales. Intel executives said that they were seeing an impact from tablet computer in their chip sales, but that it was limited.

Still, Apple, for instance, sold 4.69 million tablets in the first three months and has a big backlog of additional orders. Tablets running the Honeycomb version of Google’s Android operating system are starting to appear in stores.

Meanwhile, Microsoft is trying ramp up its presence on mobile phones through an agreement with Nokia, the Finnish handset maker. The two companies are working together on new mobile phones that would use Microsoft’s Windows Phone operating system.

In after-hours trading, Microsoft’s shares lost 2.1 percent, to $26.16. They added 1.2 percent in regular trading.

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