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Sunday, September 30, 2012

Meg Whitman’s Toughest Campaign: Retooling Hewlett-Packard

The following is an excerpt from an article in:

The New York Times
Sunday, September 30, 2012

Meg Whitman’s Toughest Campaign: Retooling Hewlett-Packard



IT’S not as easy being Meg Whitman as Meg Whitman might have expected.

At 56, Ms. Whitman, the eBay billionaire who spent a fortune unsuccessfully trying to become the governor of California, has found her Act III. She has been chief executive of Hewlett-Packard for a little more than a year, and many people are still waiting for her to get her message out about the place.

Here it is:

Meg Whitman believes in H.P., and believes that this company matters to Silicon Valley, to California, to the world. She believes that Wall Street doesn’t quite get it — doesn’t quite see the promise she sees. She believes that mobile devices, cloud computing and Big Data will re-energize H.P., a company that for a decade has grabbed more headlines for boardroom soap operas than for bold innovation.

“I believe in creative destruction,” Ms. Whitman says in a conference room near her executive cubicle.

Even, it seems, when the stakes include her company and reputation. In all likelihood, this is Ms. Whitman’s last great public performance. She became rich by building eBay, then spent more money than any candidate for public office in the nation’s history trying to become California’s governor. She was sometimes portrayed in that race as an aloof 1 percenter — as someone who pushed around subordinates, once literally, and who was unkind to her housekeeper, an illegal immigrant. “I left a little bruised,” Ms. Whitman, a Republican, says of the 2010 race she lost to Jerry Brown. “It was hard, it was personally very hard.”

So now Ms. Whitman is focusing her energy on H.P., the company founded by the tech legends William Hewlett and David Packard. Bill and Dave, as they are referred to at the company, spawned Silicon Valley. Last year, H.P. posted revenue of $127 billion. It employs 320,000 people directly, and easily that many again through a network of manufacturers and computer resellers across 170 countries.

Ms. Whitman has plenty of impressive-sounding stats at her fingertips. H.P., she says, employs thousands of people in Costa Rica, Houston and Boise, Idaho. “In India, we have 60,000 people,” she says. A new program for selling printer ink is in exactly 87 countries. Every 15 seconds, the company turns out 60 new printers, 30 personal computers and one powerful computer server. Still, she yearns for even more data, something closer to the command of the day-to-day process she had at eBay.

THE fact is, H.P. isn’t what it used to be. Next to Apple or Google, it looks like a bit of a loser. In the most recent quarter, as Apple soared to new heights, H.P.’s revenue fell 5 percent and its operating margins dwindled. Profit margins at I.B.M. and Apple are several times that of H.P. And H.P.’s share price, at just over $17 on Friday, is about where it was in 1995.

“It’s staggering,” says A. M. Sacconaghi, an analyst at Bernstein Research. “This is now the cheapest big stock in the last 25 years. That reflects an industry belief that the company is going to decline.”

Ms. Whitman is impatient to move H.P. closer to a global computing explosion that is transforming the industry. Smartphones and tablets from Apple, Google and others are now flying into consumers’ hands worldwide. Those computers are tied via the Internet to cloud computing data centers operated by Amazon, Microsoft, and hundreds of multinational companies. Information from all the consumer devices, in addition to data from billions of sensors and Web-crawling robots, is crunched in these supercomputing clouds, creating a Big Data revolution full of business opportunities and dangers.

From Ms. Whitman’s high vantage, the trends of mobile, cloud and Big Data resolve into a single phenomenon: the creation and exploitation of Information Everywhere. H.P. makes consumer devices, in addition to servers for the cloud, sensor networks, and analysis software. Instead of standing at the confluence of the phenomenon, though, H.P. is on the sidelines, with most of the parts but none of the integration to make it a leader.

H.P. sometimes seems like a place of siloed relics, as quaint as the autographed picture of Herbert Hoover in the shrine that is Mr. Packard’s office (along with Mr. Hewlett’s, untouched since the day Mr. Packard left in 1993). The stock is down 24 percent since Ms. Whitman took over. H.P. spends $4 billion a year on marketing, and, according to an arm of the ad agency WPP, has one of the fastest-eroding brands among major companies.

So why did Ms. Whitman take the job? Part of the answer may be in her new slogan for the company: “Make it matter.” She plans to unveil her strategy to Wall Street analysts on Wednesday.

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