Business, Enterprise, Software Programs

HP Admits Error of Its Ways While Sacking WebOS


All Things Digital says that HP will fire at least 525 webOS employees starting this week.

HP is following up on their poorly explained August 18 announcement. HP CEO Léo Apotheker said that in addition to spinning off its PC hardware business, it was also killing their webOS devices. At the same time, they will buy the British software company Autonomy Corp for $12 billion ? Autonomy’s profit last year was barely $1 billion. HP’s stock fell 20 percent on August 19th and lost about a quarter of its market value ? or almost $16 billion ? which vaporized in two days.

Apotheker’s August announcement was a direct contradiction to his June comments in Beijing, when he said they were trying to license webOS: ?We are talking to a number of companies. I can share with you that a number of companies have expressed interest. We are continuing our conversations.?

       HP’s Current CEO Leo Apotheker

During the IFA trade show in Berlin early this month, Samsung Electronics CEO Choi Gee Sung addressed rumors and speculation that Samsung was considering purchasing webOS from HP. Choi said Samsung would ?never? pursue such a deal.

HP’s yo-yo behavior problems recently took more twists when Hewlett-Packard was hit with a proposed class-action lawsuit by one of its shareholders following the sudden August sacking of webOS and the HP TouchPad. The lawsuit, filed last week in US District Court by Robbins Geller Rudman & Down, accuses HP executives including CEO Leo Apotheker and CFO Cathie Lesjak of misleading investors by making positive statements about the company’s performance that later proved unfounded.

Raymond Lane, chairman of Hewlett-Packard’s board of directors, was interviewed at the InformationWeek 500 conference in California. Lane and Chief Technology Strategy Officer Shane Robison both acknowledged that the company had done such a poor job of communicating those moves and many customers were left confused. It is very interesting that CEO Apotheker was missing from the conference. That may say a lot about HP management?s internal turmoil and their disjointed decision making processes.

Lane said HP was not a leader in consumer devices, describing HP’s TouchPad tablet as "a generation behind" the iPad. He said HP will continue to support its webOS mobile operating system. BSN* wonders if the over 500 webOS employees are ex-hardware staff. Or are they directly involved in some part of the webOS’ software development?

Raymond Lane, Chairman of HP’s Board of Directors       

Lane is clearly in favor of making a fast decision about the spin off and told CRN: "If we don’t make that decision, it’s because of two things: We can’t offer a better proposition to customers and investors. If we can’t, it stays inside HP."

Lane explained his idea for Personal Systems Group (PSG):  "I am lobbying, and I don’t have to lobby very hard, to call it the HP PC Business. Call it HP. It will be a sister company, just like Agilent was a very close company with HP when we spun it out. That was very good for customers. It was very good for shareholders. Agilent was a better business once spun off, because it was a very different business from what the rest of HP was doing."

Then you have the question of who will lead PSG, if they are spun off?

The most likely candidate is Todd Bradley the executive vice president for Hewlett-Packard?s PSG ? which includes everything from PCs to mobile devices, workstations, personal storage solutions and Internet services. Bradley came to HP in the summer of 2005 a few months after he left a CEO position at a company then called PalmOne. Bradley was recruited by HP chief executive officer Mark Hurd, who had just taken over the company after the widely-publicized resignation of Carly Fiorina, and his hire was one of the first major changes Hurd put into effect at HP.

According to Bradley, HP?s PC business, which currently has a yearly revenue of $42 billion, is the world’s largest PC manufacturer, with a 17.5 percent share of the worldwide market and a 26.9 percent of the US market for PCs in terms of numbers shipped. That $42 billion is a third of HP?s total sales. As a standalone company, the spin off would automatically qualify as a Fortune 100 company.

Bradley told Reuters about the spin off: ?My intention would be to lead it through this transaction … and if it’s a standalone public company, to lead that."

Since the ill-fated mid-August announcement, Bradley has been on the road meeting with Asian suppliers and customers as well crossing the US meeting with HP’s extensive VAR (value-added resellers) and partners. Bradley said a few weeks ago: ?HP by year-end will decide whether to spin off or sell PSG, with the outcome likely being a spin-off creating the world’s largest PC manufacturer.?

With so many major decisions going on and agendas being put forward by various HP managers, clearly there is an impact of customer confidence. HP is constantly pushing forward their resellers who are willing to say that there has been no erosion in customer confidence. However, industry publications have no trouble finding HP customers who are unsure if it is wise to stick with HP.

Todd Bradley, Executive Vice President for HP’s PSG