Meg Whitman could be great for HP

The former eBay chief will likely be named to lead Hewlett-Packard after the market closes. Here's why Whitman makes sense.

By Kim Peterson Sep 22, 2011 1:59PM
Shares of Hewlett-Packard (HPQ) spiked 10% Wednesday on news that the company may name Meg Whitman as its next chief executive. The stock was down 4% Thursday, however, and an announcement is expected after the market closes.

Are investors happy that Whitman is coming in or that HP is finally getting rid of CEO Leo Apotheker? Probably yes to both.

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And while some observers say Whitman is the wrong person for the job, I disagree. I think Whitman could finally bring some much-needed sanity and discipline to a company that has squandered everything.

Whitman knows how to manage, and she knows how to grow a company. When she took over eBay (EBAY) in 1998, annual revenue was only $86 million. By the time she left a decade later, revenue was an impressive $7.7 billion.

Whitman led eBay through a fast-changing environment, growing a unique business model even as Amazon (AMZN) and other companies threatened to annihilate it.

Yeah, but Whitman doesn't know hardware, detractors say. Let's look at the similarities here. The PC world that HP once dominated is changing fast. Consumers are moving to tablets. Businesses are using cheap commoditized computers and servers and focusing more on software.

HP is an old-world giant that doesn't stand a chance if it can't change. And it's already signaled it plans to do so, with talk about spinning off its PC business. But it needs to change deliberately and with discipline -- and that's where Whitman comes in.

Here's why Whitman is a good fit with HP:

Leadership. This has been the company's problem all along. It has a terribly inconsistent board that waffles back and forth and then approves huge risks for the company (like that $1.2 billion purchase of Palm last year).

HP needs a strong culture, and Whitman created that at eBay. She wasn't the nicest CEO, for sure. But she stuck to the plan and didn't waver. The big black mark on her career there was the $2.5 billion purchase of Internet calling firm Skype. Let's hope she learned a lesson on that one.

Consulting. HP has a solid consulting business, one that has been pretty much allowed to grow on its own. Its last two CEOs didn't interfere with the business, and Whitman has the expertise to beef it up. She worked her way up as a consultant with Bain and eventually became senior vice president there.

She knows the company. She's already been on the board of directors. She knows HP's problems intimately, and she presumably knows the quirks of the extremely quirky board. She should be able to move into the CEO spot seamlessly, and if she's smart she'll have a plan to rein in the board as well.

Branding. HP is struggling with branding. What does the company even do anymore? It's in turmoil, it can't make a decision about the PC business, and customers are going to steer clear. The company needs a CEO that can show the world it's OK to give HP another shot -- and that's all about branding. Whitman made eBay into a household name, and, as CNet points out, she has good experience with Disney (DIS), Hasbro (HAS) and Procter & Gamble (PG).

There are risks with Whitman, to be sure. She doesn't have experience with a company of HP's size. Few do. And she'll have a hard time unifying all of HP's businesses, wrapping them into an overall strategy. Herding cats would be easier. Finally, she takes on a lot of baggage, and it will be hard to break free of the past.

But I think Whitman's got what it takes. She showed a lot of strength and leadership at eBay and even in her failed run for governor of California. HP will be tough, but really, the company couldn't fall any further. Whitman's on cleanup duty, and she'll be fine.

2Comments
Sep 22, 2011 4:58PM
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The chances of Ms. Whitman reading this are slim and none...er, none actually. But I'll tell you one way she can win my confidence: Put some horsepower behind the TouchPad. I mean, seriously? HP is going to drop $1.2B on Palm and then say, "Eh! Never mind."?

 

Job 1: Get enough security and authentication options on the TP so users can log onto their corporate networks and Exchange servers. You know, I bet Ms. Whitman knows a thing or two about network security after her experience at eBay and PayPal. I am so tired of wandering around my corporate campus with my awesome and attractive TouchPad and listening to the snickers of the iPad users as they check email, make appointments, etc. It's embarrassing.

 

Job 2: Decide where you fit in the PC market. I've bought 3 laptops in the last 4 years and they've all been Dell's. Why? Price, my friend, price. High end PCs and laptops are nice but in case you haven't noticed, we're in a recession. Ms. Whitman may be a billionaire but her customers are not.

 

Job 3: Don't mess with the sacred cow - Printers. As much as I whine about the cost of ink cartridges (my dear wife has to print EVERYTHING), our newest printer is...you guessed it...an HP. It was the best device on the market for the price and the cost per page was actually one of the lowest - unless that guy at Office Depot was lying.

 

 Meg, I wish you the best of luck. If the Earth's orbit stops and you happen to read this. Thanks for the opportunity to offer my two cents.

 

Bon chance.

Sep 22, 2011 5:55PM
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Whitman is not the solution, she is a symptom of the problem(s) at HP. Yes, she COULD be great for HP....and monkeys COULD fly out of my butt!
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