Leo Apotheker has really done a number on HP over the past 11 months.
Lets follow the money!
-$10B in market value has been wiped out since he announced his plans for the latest re-org. The stock has lost 40% of it’s value from the day his hiring was first announced.
-Autonomy, a deal I could see the point of when it was announced and I liked that HP was getting gouged on the price, is now costing HP close to $12B all in. Before today 42% of Autonomy stock has been tendered by shareholders meaning the deal is slowly creeping towards completion.
-Shutting down the former Palm/WebOS business has cost HP $1B in restructuring charges.
So in 11 months Leo’s presence has cost HP shareholders close to $23B in cash and market cap.
Leo’s out, his card was marked when he lowered guidance for the third time. While at SAP he led the company to it’s first loss in it’s history. SAP got rid of him after ten months, he lasted one more at HP due to playing “Where’s Leo?” early on with Larry Ellison’s process servers during the Oracle Vs SAP case early in the year.
Now that Leo joins the disgraced former HP CEOs club what matters is what HP does next.
They don’t have time to play another game of CEO Idol as Wall Street is looking for forward movement and a plan, the rumours say they’ll hire Meg Whitman. Whitman who’s been at a loose end since she blew $144M of her own money losing the election (Like HP really needs another big spender) to be Governor of California, all while picking an ugly fight with the Nurses Union and it’s members, is the wrong choice for this job.
Does she understand the business of selling hardware, software and services? There’s nothing in her professional background which would lead one to suspect she does. Does she have time to learn? No, Leo took all the honeymoon time.
Will she get the job? Possibly. Unless she refuses it. She was smart enough to hit the eject button on eBay just before growth stalled and even though she massively overpaid for Skype (There’s that big spender thing again) Wall Street does like her.
Regardless, by the end of this week Leo will be out and someone, a place holder or otherwise will probably have said they’ve changed their mind on spinning off the PC Business.
Autonomy though is a knottier problem. By offering a breakup fee of only $116M HP signalled to the market that come hell or high water this deal was going through. To put that in order of magnitude Google’s breakup fee with Motorola on a $12.5B acquisition is $2.5B. With a 42% holding if they attempt to unwind the deal that they could find themselves sued for Billions by Autonomy and it’s shareholders. And they still won’t own Autonomy.
That and the fact the Board already signed off on the deal the first time around means whoever they put in place will be charged with getting the deal done. Fast.