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HP’s future – Part one Meg Whitman’s master-stroke

HP’s future – Part one Meg Whitman’s master-stroke

Meg Whitman, CEO of beleaguered HP, isn’t stupid but then she isn’t clever either. She has however learnt the art of political survival from her self-funded abortive attempt to become governor of California, which saw a $145m of election bill and a lesson in personal wealth destruction.

$4bn was the overnight market cap loss as a result of Whitman’s state of the nation review yesterday. HP shareholders bite deep again. But importantly and cleverly by referring to HP’s CEO mortality rate as “the single biggest challenge”, she has challenged the dysfunctional HP board very openly and publicly to give her time. The single biggest challenge HP faces is their in-fighting and corrosive board.

Whatever happens in the near future Whitman has secured herself a reputational “get out of jail free” card.

Whitman points to herself as the steady pair of hands that HP needs, whilst writing off 2013 economically and stating by 2015 that HP will “hum”. HP does not need another Mark Hurd spreadsheet jockey. HP needs a visionary leader, someone who not only sees the future but actually creates it.

In March 2011 Leo Apotheker (then HP CEO) stated “HP has lost its soul” and positioned himself as the anti-Mark Hurd CEO. Leo was “toast” a matter of weeks later, as was Mike Lynch (CEO of Leo’s brilliant acquisition of Autonomy) ousted in very unceremonial fashion, as was …, as was …

Deja Vu abounds, for example Leo was slated for the embarrassing launch and within days cancellation of the new HP Touchpad – last week Whitman announced a return to the tablet market – careful girl, don’t use that get out of jail card too soon!

The real client and market interest should lie with HP enterprise and outsourcing services, or HPES division which incorporates the remnants of the great EDS empire. Blamed largely for the $10.8Bn write down and positioned as being hit “by a slowing economy in most of our biggest regions including western European (that we be us then) and China”. Returning a mere 3% return HPES has been restructured to death and, according to influential CRN, been paraded around Private Equity companies without success.

Bizarrely Whitman now refers to EDS by name, something HPES management are not allowed to do, and recently told a meeting of HP partners that “EDS is going to be a great turnaround story” – there’s that damn Deja Vu things again.
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In Part Two of this story we will examine the case for an EDS revival.

This column has long advocated the splitting of HP into two companies – a separate Services entity and the retention of the Product company.

If you are interested in this, please check out the previous Lex columns on HP on our website.

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