Apotheker Ousting: HP 'Flailing', As Future Hangs In Balance

Written by Oonagh Reidy     22/09/2011 | 05:06 | Category: INDUSTRY

HP has crash landed and is a risk to anyone who does business with it, analysts have warned. This warning comes as rumours circulate about the future of HP boss Leo Apotkeker, who may be about to be replaced by ex eBay chief Meg Whitman.

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Beleaguered HP CEO, Leo Apotheker.
"HP is flailing, causing more uncertainty and increasing the risk of doing business with it," Carter Lusher, Ovum analyst has warned.

This stark estimation of the the fortunes of the biggest PC and printer maker globally, comes as HP's board of directors are said to be "thrashing out a host of issues, including whether to name Whitman as the interim CEO," say sources.

And what's worse, companies and IT personnell should avoid making "major commitments" to HP products given the uncertainty surrounding the brand.

And ditto for resellers too, it appears.

"CIOs should beware of the downsides of making major commitments to HP products and services." the Ovum analyst advises.

 Read HP Boss To Get The Boot & Replaced By eBay Chief? Here

"Whether or not the rumor is correct or not, the damage has already been done" and "only reinforces that HP is a company that is in severe disarray."

This possible ousting of HP boss comes just weeks after it announced it would get rid of spin off its profitable hardware business and focus on software and cloud services for business, instead, as it tablet failed to make an impact against the domination of iPad. 

But the malaise within Palo Alto may have less to do with former SAP chief Apotheker and more to do with the board, who have ousted two CEO's in the last three years.

"That the Board would be considering a change in CEO less that 10 months after Apotheker took over as CEO is a damning indictment of not just the new CEO, but also the Board itself."

And analysts elsewhere are singing the same song:  "he was doomed from the beginning," Brian White, Ticonderoga Securities, said, referring to the now beleaguered Apotheker.

"The die was cast for whoever stepped into that position."

HP shares immediately rose up 6.6% to close at $23.96 yesterday on the US stock markets, following the news.

However, staff at webOS, the abandoned platform for tablets who are also being layed off, may just be the first of a flight of staff absconding from the clutches of Palo Alto, analysts predict.

The employees at HP are "demoralized" after years of severe cost cutting, layoffs, so it is likely other "key executives" are getting ready to walk or are already "mentally out the door, " Lusher also believes.

And if Apotheker is fired, expect armagaddon at the No.1 PC company by sales and spooked investors may even demand the company be broken up to unlock the remaining value of the Palo Alto giant.

CIO and IT firms alike should assign a "risk premium" to dealing with HP and demand better discounts, pricing, or packaging and also explore new terms and conditions that protect the company should HP be broken up.