Hours after announcing she was splitting up one of the tech industry’s most iconic companies, Hewlett-Packard CEO Meg Whitman talked about HP’s strategy on stage at Fortune’s Most Powerful Women Summit in Laguna Niguel, California.
The process won’t be complete for a full year. “It takes a year to separate these companies” as HP sorts through taxes, legalities, three years of audited financials, and so on, she said. HP has promised shareholders that this transaction will be tax-free to them.
She also joked, “It’s interesting, eBay decided to split PayPal just a week before.” Whitman cut her teeth in the tech industry as CEO of eBay, growing it from 30 employees in 1998 to 15,000 employees and $US8 billion in revenue in 2008, and making herself a billionaire in the process. Buying PayPal was her signature deal. “One of the all time great acquisitions, I must say, is eBay/PayPal,” she told attendees, laughing.
We wouldn’t disagree, but need to point out her batting average at eBay wasn’t 100%. Under Whitman, eBay also bought Skype for $US4 billion, later selling it for $US2.75 billion.
Whitman would not comment on the ongoing chitchat about if her new company, HP Enterprise will go back into merger talks with EMC. Those talks fell through right before HP announced the decision to separate. Reports said that EMC wanted to sell itself for more than HP was willing to pay.
But maybe the most interesting thing she said was when she was asked what others could learn from HP’s acquisition strategy of the past 15 years. HP bought a lot of companies during that time, including Compaq, EDS, Palm, and Autonomy which led to the company’s ongoing 55,000-employee layoff and writing off about $US17 billion.
She said the crux of HP’s problems wasn’t the acquisitions themselves but lack of succession planning.
“Bill and Dave started HP when they were 25 years old and ran the company for 40 years, the longest founder pair, I believe. But when they left, succession planning wasn’t what you’d hope to be,” she said.”The CEOs have had different strategies, approaches. The organisation went from strategy to strategy,” she describes. “I promised the board, the next CEO of HP Enterprise has to come from inside the company, not come from outside and learn five different businesses.”
That was a politically nice answer, but maybe not a fair one to Hewlett and Packard. The first non-founder CEO was John Young, chosen while they were still on the board. He ruled for a a solid 14 years. Lewis Platt took over from him and lead the company to its biggest growth, and $US47 billion in sales.
Carly Fiorina was next. Some long time HP employees say that it was under her reign and her battle with the founders’ heirs to buy Compaq, where the trouble began.
That said, Whitman’s point is still a good one. A company’s strategy is only as good as its current leaders. And given the huge decision Whitman and her board just made, the jury’s still out on them.