HP Board Considering Giving Apotheker The Boot: Reports

Hewlett-Packard's board of directors is reportedly considering replacing CEO Leo Apotheker, multiple news outlets said Wednesday, citing sources familiar with the situation.

HP's board is mulling former eBay CEO Meg Whitman as a potential successor, according to Bloomberg and AllThingsD.

An HP spokesperson contacted by CRN declined to comment on the reports. "It's the company’s long-standing policy not to comment on speculation," said the spokesperson.

So far, Wall Street is reacting positively to the prospect of new HP executive leadership. HP shares jumped more than 11 percent to $25.05 at noon Eastern time.

Apotheker has presided over three consecutive quarters in which the Palo Alto, Calif.-based firm has cut guidance, and HP shares have dropped nearly 50 percent since he took the helm at HP last Nov. 1.

HP last month shocked customers and channel partners by unveiling plans to explore a spin-off or sale of its Personal Systems Group and also killing off the HP TouchPad tablet just over six weeks after its launch.

Partners were surprised by the TouchPad decision because HP had been stepping up sales and technical training around the product. But HP's PSG revelation was even more disquieting for channel partners who've been selling PSG products for years.

"The sudden announcement of PSG potentially being sold or spun off created the perception in our customers' minds that HP isn't really sure about their strategy," said Romi Randhawa, president and CEO of Fremont, Calif.-based solution provider HPM Networks. "We had to do a lot of damage control to let them know that HP is still a solid company."

Another HP partner, who requested anonymity, says he's been disappointed in Apotheker's approach to the channel. "He has focused his efforts in diluting business units per board direction rather than focusing on the feet on the street to help drive revenues, instill confidence with partners and meet with major customers," the source said.

NEXT: Apotheker Under Fire

Yet another HP partner told CRN that new CEO leadership could help HP re-establish its credibility in the PC market. "I think this would help to show the channel and end users that HP's board is as unhappy as we are about what look like questionable strategic decisions," said the source, who also requested anonymity.

HP didn't respond to a request for comment on the issues raised by these partners.

Apotheker is also taking heat from investors over HP's $10.3 billion bid last month to acquire Autonomy, a developer of information management and infrastructure software. Many analysts believe HP is paying way too much for Autonomy.

"The overwhelming majority of large HP shareholders remain opposed to the HP/Autonomy deal," Sanford C. Bernstein & Co. analyst Toni Sacconaghi said in a report last week. "Investor exasperation with the company is the highest we have seen in 13 years following the sector."

Ray Lane, non-executive chairman at HP, has repeatedly defended Apotheker from critics, insisting that HP's difficulties stem from former CEO Mark Hurd's cost-cutting approach. "Mark Hurd did not invest," Lane told Reuters in July. "He burned the furniture to please Wall Street."

Apotheker has made boosting HP's software services business a top priority, and as part of this goal, HP in May moved its Technology Services business into the enterprise storage, servers and networking (ESSN) division.

Apotheker himself has spoken out against Hurd's lack of investment in services. "We had a solid strategy for services, but we didn't invest in the parts to support the strategy," he said in May during HP's Q2 earnings call. "Instead, HP focused on maximizing its shorter-term margins. We have over-executed operationally and under-invested strategically."