HP CEO Carly Fiorina Steps Down

UPDATED: The CEO quits over disagreements with the company's board; CFO Robert P. Wayman takes over for now as a search for a permanent replacement begins.

UPDATED: In a move rumored for weeks, HP Chairman and CEO Carly Fiorina has stepped down following disagreements with the board on how to govern the company.

CFO Robert P. Wayman will her take her place as CEO immediately, but on an interim basis. Wayman has also been appointed to the board of directors and will retain his duties as CFO.

Carly Fiorina
Carly Fiorina
Source: HP

The board will begin a search for a new CEO immediately, according to a statement. Patricia C. Dunn, an HP director, has been named non-executive chairman of the board.

The Palo Alto, Calif., systems vendor does not expect to make any other structural or executive changes in the near future, and will announce its first quarter financial results on Feb. 16, after the market closes.

Fiorina alluded to friction with the board.

"While I regret the board and I have differences about how to execute HP's strategy, I respect their decision," Fiorina said in a statement. "HP is a great company and I wish all the people of HP much success in the future."

On a conference call with investors Wednesday, Dunn refused to detail any specific disagreements between the board and Fiorina, praising the CEO for revitalizing the company. Dunn also said the change was not related to a change in strategy, but rather a desire to accelerate that strategy.

"The board reviews this company's performance and leadership performance on an ongoing basis and concluded a change now was in the best interest of the company," Dunn said.

But Dunn implied that Fiorina wasn't as active as she could have been in her role as CEO.

"Looking forward, we think the job is reliant on hands-on execution, and we thought that a new set of capabilities was called for," Dunn said.

Asked if a new CEO must adhere to a specific strategy the HP board has planned, Dunn said the directors are not making any conditions, and that the strategy will be a major topic of discussion with CEO candidates.

Wayman said the new chief must have great execution and strategic skills, adding that the company has no plans to install a COO, which several investors concerned about the company's performance have suggested.

Wayman also added that the move didn't have anything to do with HP's first-quarter earnings, which are expected to be in line with analysts' estimates when they are announced next Wednesday.

IDC analyst Roger Kay said it was clear the move was a push and not a jump.

"If you assume that the reorganization has been successful in that the right pieces are now on the right squares, then a successor chosen for his or her ability to execute will likely help bring to fruition the changes envisioned by Carly and the board," Kay said.

Rumors of executive changes at HP have been floating for weeks, with analysts saying there were fundamental disagreements between Fiorina and the board over how the multi-billion-dollar company should be run.

In January, sources told the Wall Street Journal the company's board is tired of HP's inconsistent earnings and second billing to IBM. HP has been frustrated by its inability to clearly articulate its Adaptive Enterprise strategy as it relates to IBM's e-business on-demand plan for next-generation computing.

But at the time, those sources also said Fiorina was not at risk of losing her job.

Fiorina has had more challenges than most CEOs, having to guide HP through a $23 billion merger of computer maker Compaq that culminated in 2002.

Experts say that consumption and integration is still affecting HP today, and the company has had several significant restructurings in the last two years. The most recent was a merger of the company's printer and PC businesses.

In a research note this morning, SG Cowen & Co. analysts said they expect Wayman to affirm HP's current strategies; "however, there is no question that the issue of IPG [Imaging and Printing Group] partitioning will be wide open."

They also said investors will be pleased with the management change. In early trading, shares of HP were up $1.66, or 8 percent, to $21.80 in heavy trading.






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