Column

HP suddenly seeking CEO

Since corporations are legally considered individuals, it might be instructive to ruminate on HP as such. From that standpoint, HP's 2001 acquisition of Compaq stood as a Really Extreme Makeover whose results were never quite what the patient (HP) or the surgeon (Fiorina) had hoped. Given the deal's sheer size and audacity, its essential failure was even more disappointing.

The fact is that the two companies possessed notably different skills and products that should have created striking synergies, and the acquisition should have created the impetus for HP to reconsider and even reinvent itself, making it better able to tangle with and win against competitors including IBM, Dell, and EMC.

Instead, HP seems to have regarded Compaq as merely a miscellaneous collection of commercial products whose purchase allowed the company to establish or re-establish share leadership in a number of existing markets, a short term strategy prone, considering the competitors involved, to long term collapse.

Given HP's ongoing struggles in every market but printing and imaging, as well as its recent spate of bad press in financial publications, the board's decision to dismiss Fiorina is not a complete surprise.

However, its overt dismissal of Fiorina before a replacement has even been considered betrays considerable levels of disapproval and disappointment. Contrary to Hollywood endings, CEOs of huge companies are seldom booted out in a summary fashion.

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Overall, the method of Fiorina's departure indicates that, for the HP board at any rate, the revolution is over and done, and it is high time the company finds someone who can execute a measured, quantifiable go-to-market strategy.

That said, what will HP be looking for in a new CEO/COO? First of all, the company will be seeking an executive or executives who have succeeded at running the day to day business operations of a large, multi-division corporation. This will not be an easy position to fill, but ongoing consolidations in IT-related markets including telecom have increased the pool of qualified candidates.

Former Compaq CEO and HP president Michael Capellas' hard work at MCI has stabilized that company and made it an attractive takeover candidate. Put this in the stranger things have happened column, but if HP's board is looking for proven hands-on management, Mr. Capellas' experience, expertise, and thorough knowledge of HP would make him an intriguing candidate to consider.

Note: Charles King is the Principal Analyst of Pund-IT, Inc. This report appeared in the February 9, 2005 edition of Pund-IT's Weekly Review.

© 2005 Pund-IT Research. All rights reserved.

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