PALO ALTO (CBS SF) -- The Hewlett-Packard Co. board of directors ousted CEO Leo Apotheker on Thursday and replaced him with former eBay CEO Meg Whitman.
The announcement came just after the stock market closed for the day, with HP shares dropping about 5 percent.
Whitman is HP's eighth CEO since 1999 and the second one in the last year. Whitman has to take on a massive to-do list, stop HP's slide, and either continue the company's current strategy or invent a new one.
Whitman got the top spot because there are few available people with the experience to run complex technology businesses, the board concluded, while Apotheker was removed after just 11 months on the job because the board lost confidence in his ability to lead the company long-term.
KCBS' Matt Bigler Reports:
"We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead. Meg is a technology visionary with a proven track record of execution," HP executive chairman Ray Lane said in a statement. "Furthermore, as a member of HP's board of directors for the past eight months, Meg has a solid understanding of our products and markets.
The management shake-up represents yet another turnaround strategy at one of Silicon Valley's oldest, but most publicly dysfunctional, firms. Since joining HP in November, Apotheker's strategic decisions had been drastic, and did little to inspire confidence.
KCBS' Tim Ryan Reports:
During Apotheker's tenure, HP had missed earnings three times and appeared to be in a financial tailspin. HP's stock fell nearly 50 percent during his time at the helm.
Apotheker also orchestrated the pricey $10 billion purchase of Autonomy in an effort to bolster HP's software standing and plotted a spin-off of the PC unit. Whitman and HP on Thursday didn't directly address the PC spin-off or whether the current strategy would remain.
Whitman, a former GOP candidate for governor of California, said she was "honored and excited to lead HP. I believe HP matters - it matters to Silicon Valley, California, the country and the world."
The initial reaction to HP's move to name Whitman CEO was decidedly mixed. The consensus view was that Whitman has a lot to fix and not a lot of time to do it.
"Whitman has not run a company the size of HP, nor one focused on the enterprise, both of which are concerns that are made more important by the fact that HP is in need of a turnaround in many lines of business, not just a new strategic direction," Collins Stewart analyst Louis Miscioscia said in a research note.
KCBS' Tim Ryan Reports:
Added Sterne Agee analyst Shaw Wu, "While we believe she has proven to be a very capable manager helping grow eBay from a start-up into one of the largest internet companies, we think an ideal candidate for HPQ should have extensive experience in the enterprise market. In addition, we believe expertise in supply chain management would be helpful as well."
HP watchers had openly questioned the initial hiring of Apotheker. Since Apotheker only knew software, some quipped that HP hired a CEO that knew only 4 percent of the company's business. As noted by Jeff Nolan at Venture Chronicles on Thursday, you could argue that Whitman knows zero percent of HP's business.
Wall Street seemed to be thinking the same thing. HP shares on Wednesday spiked on word Apotheker was gone. On Thursday with word out that Whitman was the likely replacement, shares almost gave back all of those gains.
(Copyright 2011 by CBS San Francisco. All Rights Reserved. The CBS Interactive Business Network and CBS Moneywatch contributed to this report. This material may not be published, broadcast, rewritten, or redistributed.)
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