HP CEO Carly Fiorina Steps Down

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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
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.