Should Hp's Ceo Meg Whitman Be Fired ?

[Anonymous]

Should Hp’s Ceo Meg Whitman Be Fired ?

HP’s CEO says the big write-down the company took on its $10 billion Autonomy acquisition was the fault of prior management. But investors are chafing at the company’s weakening performance and lousy stock price.

A question that may get larger after Hewlett-Packard (HPQ -1.79%) wrote off $8.8 billion of its 2011 acquisition of British software company Autonomy is this: Should Hewlett-Packard start looking for a new chief executive?

The idea may sound loopy. Meg Whitman, the current CEO, has only been in the job for 14 months. But in her tenure, the stock price has fallen some 48% overall. It’s worse for the year, down 53% and down about 60% since peaking at about $30 on Feb. 16. Moreover, half the traders in an online poll want Whitman gone and maybe the board of directors, too.

The stock closed Wednesday at $11.94, up 23 cents. So far this week, the stock is down 7.1%.

This year alone, HP has written off the bulk of two major investments — Autonomy and the $13.9 billion acquisition of Electronic Data Systems from General Motors (GM -0.24%) in 2008. Autonomy is the uglier. HP says Autonomy "used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company prior to its acquisition by HP."

In other words, HP was the victim of fraud and has referred the case to U.S. and British authorities.

Meanwhile, HP’s performance has been nothing to write home about. Revenue in the fiscal fourth quarter fell 7% to $30 billion, partly due to a rising dollar. Adjusted net income (taking out the write-downs) was off 3% to $2.3 billion. For the fiscal year, revenue was down 5% to $120.4 billion. Adjusted net income was down 23% to $8 billion.

In the fourth quarter, HP saw weakness in its computer business, its printer business, its server business and its services business. The only growth was in its software business, which, ironically, includes what was Autonomy.

It’s in the process of reducing its staffing by some 29,000, about 8% of the total, by the end of 2013.

And the company hopes new personal computer, tablets and the like, based on Microsoft’s (MSFT -0.75%) Windows 8 program, will start to win share from Apple (AAPL -0.89%) and Samsung. (Microsoft is the publisher of MSN Money.)

So is all this Whitman’s fault? Well, she was brought onto the HP board by former CEO Leo Apotheker and did vote to approve the Autonomy deal. But, in fairness, the deal was brought to the board by Apotheker and strategy chief Shane Robison. And the accountants who were supposed to do due diligence didn’t come close to the issues that HP says are there.

Most of the directors who voted for the deal are still on the board. Whitman says the problem was that the accountants didn’t do a good enough job in their exams of Autonomy’s books.

But one management consultant thinks Whitman and the HP board should be fired anyway. They aren’t running Hewlett-Packard to become a pre-eminent technology company, says Adam Hartung, who runs Spark Partners outside Chicago.

Whitman, he added, was only writing off assets. "She’s not doing anything to fix HP."

At best, HP is playing catch-up on smartphones, tablet devices and personal computers, Hartung said in an interview. It doesn’t appear to be scoping out where technology is headed. As a result, he added, "Every month that this goes on is accelerating HP’s demise."

Those are rough words for a company that has more than 300,000 employees worldwide. Hartung doesn’t care. HP needs to have a courageous CEO and board of directors.

[Author]

November 27, 2012 at 8:45 AM