Issue of the week: Dysfunction at Hewlett-Packard

Can Meg Whitman, the new CEO, defy expectations and turn HP around?

“You have got to be kidding.” That, said David Streitfeld in The New York Times, sums up the tech world’s reaction to former eBay CEO Meg Whitman’s being handed the reins of beleaguered Hewlett-Packard. The world’s largest computer-maker has seen its market capitalization plummet by nearly half over the past year. So it came as little surprise last week when the company’s board of directors fired CEO Léo Apotheker—HP’s third executive in six years—after just 11 months on the job. But his replacement by Whitman, who ran a failed California gubernatorial bid last year and has been an HP board member only since January, is widely seen as “an unmitigated disaster.”

And so it should be, said Robert Cyran in Hiring Whitman is “almost completely unjustifiable.” Yes, she built eBay into a Silicon Valley success story, but “growing a spry upstart” is radically different from “fixing a lumbering giant.” Her consumer-oriented background will jar with HP’s reliance on corporate clients, and she just “doesn’t seem to possess the skills to turn the company around.” But the real problem isn’t Whitman, said James B. Stewart in The New York Times. It’s HP’s totally dysfunctional board, which is “rife with animosities, suspicion, distrust, personal ambitions, and jockeying for power.” Most of its members had never even met Apotheker when they hired him last year. “It has got to be the worst board in the history of business,” said former HP director Thomas Perkins.

What HP’s board and carousel of CEOs have accomplished is breathtaking, said Steven Pearlstein in The Washington Post. They’ve taken “one of the world’s most respected and profitable companies, the very heart and soul of Silicon Valley’s innovation culture, and turned it into a real-life corporate soap opera.” Perhaps the most interesting development in the latest drama is that HP’s board chairman, Ray Lane, who “secretly engineered” Whitman’s “rubber-stamped” appointment, is being given an expanded role as executive chairman—which is a bit like Dick Cheney picking himself for vice president. Maybe Whitman can defy the market’s low expectations and turn HP around. But “the manner of her selection” suggests that the company’s board “has learned very little from the embarrassing and costly screwups of the past decade.”

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