She had him at the Depression glass. When Hewlett-Packard (NYSE: HPQ ) CEO Meg
Whitman reminisces about her early days at the helm of eBay (NASDAQ: EBAY ), she
fondly relates a call she got from then-SEC Chairman Arthur Levitt shortly after
the blockbuster auction site went public in the fall of 1998. Back then, EBAY
stock was so volatile that it could be up 80 points and down 50 points in the
same day. Then Whitman got a call from Levitt and when the SEC called a CEO in
the middle of the dot-com boom, it usually signaled concerns that manipulation
was causing the stock's volatility. But Levitt didn't talk about eBay's
volatility. After a few pleasantries, he came to the point: As a buyer and
seller of Depression glass on eBay, member feedback had just earned him a yellow
star, he said, "And I thought you would just like to know. Whitman's
13-year-old story illustrates one of the few enduring truths in the age of
Internet, Facebook and Twitter: The buzz is as important to building brands and
businesses as a company's foundational technologies. And as a successful tech
CEO who ran and lost an expensive race for governor of California last year,
Whitman brings a lot of buzz to HPQ. For starters, Whitman's decision to
release for free the WebOS code it acquired with its $1.2 billion purchase of
Palm is crazy like a fox. The operating system basically was wasted on HP's
TouchPad, the company's dark horse entry into the tablet race, the last of
which were liquidated on eBay over the weekend. With her open source strategy,
Whitman has the opportunity to open up a development platform potentially as
feature-rich as Oracle 's (NASDAQ: ORCL ) Java, drive revenue to HP's
Download Store, and potentially create a collaboration opportunity with Windows
Phone. Hewlett-Packard already is talking to Microsoft (NASDAQ: MSFT ). Last
week, both companies announced a four-year deal that will use HP's cloud
infrastructure to deliver Microsoft's communications and collaboration
applications to business and government customers. Both companies hope the deal
will help jump-start cloud computing with customers who still have major
concerns about platforms and applications that they don't control in
traditional servers and data centers. Wall Street already has begun to receive
these initiatives favorably. Since Whitman came aboard Sept. 22, HPQ shares have
risen more than 20% from below $23 to around $28. Conversely, when former SAP
AG (NYSE: SAP ) chief Léo Apotheker was in charge of HPQ from November 2010 to
September of this year, the stock fell 46%. But good news is fleeting, and
Whitman is going to have to keep up her buzz and business strategy if she wants
a long-term home at HP. Whitman is HP's fifth CEO in six years that's the
same number of leaders the company had in the prior 93 years. OK, two of them
were interim, but an HP board that's pining for the next William Hewlett and
David Packard has been decidedly impatient with all the men and women that
recently have tried to move the company into the 21st century. Former AT&T
(NYSE: T ) and Lucent exec Carly Fiorina prevailed over HP's enterprise
business chief Ann Livermore in 1999 to land the top job. But a contentious
marriage with Compaq helped sour the board on Fiorina, which in 2005 ousted her
in an ugly scene that played out in the financial press. CFO Robert Wayman
stepped in for 45 days until the board hired NCR's Mark Hurd. The
hard-charging, cost-cutting Hurd delivered for shareholders five years of
growing revenues and stock appreciation to the tune of 130%. But Hurd resigned
in 2010 after the consultant he hired reality TV maven Jodie Fisher accused
him of sexual harassment. Hewlett-Packard CFO Cathy Lesjak stepped in for two
months until Apotheker whom most HP board members had never met took over in
November 2010. But software-focused Apotheker's bare-bones strategy for HP's
future, which centered on selling 100 million devices running WebOS a plan that
didn't account for the huge head start of Apple (NASDAQ: AAPL ), Nokia (NYSE:
NOK ) and others sealed his fate in only 10 months. That much recent turnover
at the top and a board whose interpersonal dynamics have compared to The Young
and The Restless clearly illustrate that HP's biggest challenges are not
limited to its products and markets. And that makes Whitman's job a lot
harder. As of this writing, Susan J. Aluise did not hold a position in any of
the aforementioned stocks.
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