September 22, 2011, 4:05 PM — Hewlett-Packard CEO Leo Apotheker was ousted from his position on Thursday and replaced by HP director and former eBay CEO Meg Whitman, less than a year after he took the job.
Rumors had swirled in recent days that HP's board was about to part ways with Apotheker, a former CEO of business software vendor SAP. Only a tiny amount of HP's business currently comes from software, a fact Apotheker sought to change in a strategy he laid out soon after joining the company in September 2010.
Apotheker came to HP at a turbulent time following the departure of its high-profile CEO, Mark Hurd, after a scandal involving his relationship with an HP contractor. Hurd ended up securing a post as co-president of HP rival Oracle.
The market did not react well to a number of announcements and moves Apotheker made, including the planned purchase of infrastructure software vendor Autonomy and talk of spinning off HP's PC division. This last topic sparked a major downturn in HP's stock price, which may have quickened Apotheker's removal.
Overall, the HP experience must have had an element of deja vu for Apotheker, given the trouble he experienced as sole CEO of Germany-based SAP.
A long-time SAP executive, Apotheker ultimately lasted less than a year in the top post there as well, and was replaced by insiders Jim Hagemann Snabe and Bill McDermott in February 2010 as SAP returned to the co-CEO format it had used in the past.
"I think that Apotheker came into something of a thankless job," said Charles King, president and principal analyst with Pund-IT. "It's difficult for any CEO to come into a company that is in turmoil, which HP clearly was after the ouster of Mark Hurd."
Still, moves such as the possible PC business spinoff "may simply have been too radical a surgery for the market to stand," King added.
Other big factors leading to the change in leadership were HP's missing its financial targets in three recent quarters and paying a lot of money to get deeper into the software business through acquisitions like Automony and Vertica without giving a clear strategy for the future, according to IDC analyst Crawford Del Prete.
"There was probably an underestimation on the company's part and on Leo's part ... about how difficult this transformation would be," Del Prete said. "They haven't been able to effectively communicate their strategy and vision."
"Investor confidence is a very difficult thing," he added. "When it starts to get eroded, it's very difficult for that person to get confidence back."
Beyond Wall Street, the idea also likely stirred up some concerns among HP's customer base, said analyst Ezra Gottheil, senior analyst at Technology Business Research.