Meg Whitman seeks a new direction for Hewlett-Packard

  • Associated Press
  • Saturday, September 24, 2011 12:01am
  • Business

SAN FRANCISCO — Meg Whitman’s primary job as Hewlett-Packard Co.’s new CEO will be to restore a sense of direction at a company that has lost its way after a decade of leadership lapses and disjointed deal-making.

With 320,000 employees, more than $125 billion in annual revenue and a broad swath of businesses, the technology conglomerate needs a leader who can quickly decide on a clear path and convey that to customers and shareholders.

The company’s stock hit a 6-year low Friday, a day after Whitman got the job following HP’s firing of Leo Apotheker. HP has lost $60 billion in market value since Apotheker’s predecessor, Mark Hurd, resigned amid a sexual harassment scandal last year.

In technology, size isn’t always an asset, as HP is learning. One of the biggest challenges for Whitman will be to figure out how big HP needs to be. It’s a key question that has tripped up a string of CEOs, from Carly Fiorina and her hard-fought battle to buy Compaq Computer, to Mark Hurd and his $20 billion acquisition spree and 50,000 job cuts, and Apotheker’s poorly received plan to steer HP away from lower-margin areas of computer hardware.

No one has figured out the right balance, which has made the top job at HP one of the hardest CEO slots to fill.

HP, which was founded in the 1930s as a maker of sound equipment, is no stranger to long and difficult transformations. But, under Whitman, the company could shrink substantially. Revitalizing the company depends on whether she can lead a major transformation. Indeed, analysts believe HP needs to emulate IBM Corp., whose dire financial situation in the 1990s forced a complete exit from consumer markets.

IBM’s transition, however, was brutal. The Armonk, N.Y.-based company shed more than 150,000 workers in the 1990s as the company lost nearly $16 billion over five years. It, too, sold its PC division, and HP’s flirtation with following suit indicates its willingness to aggressively pursue IBM’s model. IBM has thrived in recent years because of a focus on high-margin services and software deals.

One of Whitman’s most pressing concerns: what to do with the world’s biggest personal computer business, which supplies a third of HP’s revenue but is its least profitable division.

Last month, Apotheker said that business would go up for sale in a badly blundered announcement that hastened his demise. His disclosure likely devalued the business in the eyes of potential buyers. Many analysts now speculate that HP has no choice but to keep the business and work on repairing strained relationships with customers. Whitman says a decision, on whether to keep it or possibly spin it off, should come by the end of the year.

PCs and printers are areas where HP leads. But the company wants to abandon those businesses because its profit margins on those units are thin. In the more profitable areas where HP needs to expand, it is playing catch-up. In technology services it has to contend with none other than market leader IBM Corp. HP’s technology services division is one of several businesses that Apotheker identified as the victim of underinvestment. The company will also try to make further inroads into computer networking, a segment dominated by Cisco Systems Inc.

Another drastic move of Apotheker’s that Whitman will need to usher to completion is the company’s decision to kill off HP’s fledgling tablet and smartphone businesses, conceding defeat in fast-growing consumer markets.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.