Bloomberg News

HP’s Whitman Focuses on Hardware, While Lane Leads Software

October 27, 2011

(Updates with Whitman’s comment in fourth paragraph.)

Oct. 27 (Bloomberg) -- Hewlett-Packard Co. Chief Executive Officer Meg Whitman, who scrapped a proposal to spin off the company’s personal-computer unit today, says she has split up operational duties with Executive Chairman Ray Lane.

While Whitman has taken charge of computer hardware and corporate functions, Lane is focused on software and technology services, she said in an interview. That lets the executives “cover more ground,” Whitman said. Lane, a partner at venture firm Kleiner Perkins Caufield & Byers, is spending 30 percent of his time working on Hewlett-Packard business, she said.

Whitman and Lane assumed their current duties on Sept. 22 after the ouster of CEO Leo Apotheker, who had proposed the spinoff in August as part of a sweeping overhaul. Following an evaluation, the company found that Hewlett-Packard’s role as the largest PC seller was too valuable to its brand, procurement power and customer relationships.

“If you try to hive a division off, it’s really hard because you almost have to recreate the whole thing,” Whitman said in the interview.

Offloading the division also would have rung up $1.5 billion in one-time expenses and $1 billion a year in ongoing costs because Hewlett-Packard would have had to replicate functions, Whitman said. The spun-off company also would have potentially competed with its parent in servers and other markets, she said.

Compare Notes

When Whitman agreed to become Hewlett-Packard’s CEO in September, it was on the condition that Lane be executive chairman, according to a person close to the company. The two executives compare notes on a daily basis and hold a more detailed meeting once a week, Whitman said today.

Apotheker was ousted a month after announcing the spinoff idea, dogged by a slump that forced him to cut sales forecasts three times in less than a year. He also undermined investors’ confidence with a $10.3 billion agreement to buy software company Autonomy Corp., announced the same day as the PC group review, and by killing the company’s TouchPad tablet computer less than two months after its high-profile debut.

Hewlett-Packard hasn’t given up on tablets, despite the dominance of Apple Inc.’s iPad, Whitman said today. The company is working with Microsoft Corp. to use the pending Windows 8 operating system on tablet computers, and Hewlett-Packard may come back to market with a tablet running its own WebOS software, she said.

“The market was created by Apple,” she said. “That doesn’t mean there couldn’t be a strong No. 2 player.”

--Editor: Nick Turner, Marcus Chan

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net.

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net


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