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Takebacks! HP Walks Back Sale of PC Division

October 21, 2011

Apparently, even if you announce the sale of a $41 billions dollar business unit on a national earnings call, you can still call takebacks! Today’s Note references “HP May End Up Keeping PC Business: Report” in The article by Jeffrey Burt notes “HP executives are considering keeping the company’s PC unit rather than spinning it off or selling it to another company, according to a report in the Wall Street Journal.” [all italics are added by me and denote quotes from the article]

Leo Apotheker, fired last month, had announced the sale recently, drawing mixed reviews from critics and analysts. New CEO Meg Whitman has indicated a willingness to reconsider that sale. It hasn’t helped that none of the major industry PC manufacturers has jumped at the chance to snap up the unit. And the fate of WebOS, recently acquired with the Palm purchase, is really up in the air.

The meatiest part of the discussion may center around criticism that HP can’t build an effective internal candidate for CEO. From the article:

“HP has gone through a lot of changes over the last decade, ever since they started hiring their CEOs from outside the company,” Rob Enderle, principal analyst at The Enderle Group, said in a research note Oct. 12. “This exercise largely failed to get the results the company wanted because HP’s board failed to get talent or form teams that could run the company effectively over a sustained period. The board also failed to put in place a solid succession plan so that HP could grow top executive teams internally.”

The results of not finding candidates from within HP “have been particularly painful for HP,” Enderle wrote. “Carly Fiorina’s failure came because she lacked operations capabilities. Mark Hurd had operations skills but lacked vision and over-cut funding for critical organizations. Leo Apotheker’s strategic vision resonated with the board but he lacked operations skills (meaning he couldn’t execute).” 

The article is interesting and timely. I recommend it for a quick read.


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