HP searches for successor after Fiorina's fall

Wanted: CEO for a large multi-national IT corporation. Must be able to execute on a difficult strategy and keep a lot of people happy.

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By  Peter Branton Published  February 20, 2005

Wanted: CEO for a large multi-national IT corporation. Must be able to execute on a difficult strategy and keep a lot of people happy. Carly Fiorina’s ousting as chairman and CEO of HP leaves any potential replacement with a tough task, with analysts disagreeing about the best way forward for the computer giant. While the HP board has said it has no plans to change its current “portfolio” strategy of selling a broad range of products and services, Fiorina’s leaving has — almost inevitably — re-ignited calls for the company to spin off its PC business. Douglas Hawyard, senior analyst at Ovum, said that HP needs to “get rid of the bits that don’t help to drive revenue and profit growth. We suggest it starts right now with the PC business,” he said. Meta Group analysts said that while they doesn’t expect HP to sell off the PC business, if it doesn’t, it risks losing customers to rivals such as Dell, who will try to exploit market confusion by wooing corporate customers away. “We expect that Dell will come after HP PC customers, much as it is doing with IBM accounts, to woo the business with special incentives,” it warned in an advisory. Ironically, a senior HP manager in the Middle East last week said the company would adopt a similar tactic against another of its rivals. Christoph Schell, general manager of HP’s personal systems group in the Middle East, said the company saw an opportunity to win regional customers from IBM because of uncertainty created by the latter’s decision to sell its own PC business to Chinese firm Lenovo. HP’s board said in a statement announcing Fiorina’s departure that it would begin searching for a new successor immediately, but industry watchers believe it could take several months for a replacement to be found, with no clear successor apparent within HP’s own ranks. Indeed, part of the rationale for the board’s decision to dispense with Fiorina’s services apparently lay behind her reluctance to work with a strong number two, who could handle day-to-day duties — or be a successor after she left. Names in the frame include Michael Capellas, who sold Compaq to HP and is now CEO at MCI, and Ed Zander, currently CEO at Motorola. Capellas may be in need of a job, with MCI having been last week acquired by Verizon for $US7 billion. But his departure from HP in 2002 may make him an awkward choice politically. With the board saying it is committed to continuing the company’s current strategy however, it may prove hard to persuade a strong-enough candidate to come on board. In the interim, Robert Wayman, HP’s chief financial officer is acting as CEO, with Patricia Dunn, another HP board member acting as chairman. That may suggest that HP is looking to split the two roles in future, a practice common-place in the UK, although less so in the US. A spokesperson for HP Middle East said it could not make comment on Fiorina’s departure at this stage.

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