Once again, Hewlett-Packard's
HP investors can't be blamed for wanting less drama and better stock performance. The stock has been a laggard for a couple of years. So what might the latest board changes mean?
For starters, the changes are a distraction in the short term. A new CEO was speed-hired last September, and seven of 13 board members were appointed within the past six months, so it's unlikely that HP's seniormost leadership is a well-oiled machine. High-level changes can unsettle employees, too. At best, they spend more time trying to figure out what it means for them. At worst, change incites decisions to look for a more stable work environment.
On a more positive note, there is reason to hope for an end to the public drama. Going forward, the board will have 13 members instead of 12. The odd number prevents vote stalemates that can let dissension fester.
Long-term wild card
In the longer term, the changes have the potential to reinvigorate the stock. The key word here is "potential." New management doesn't always turn out well. For example, HP stock lagged during Carly Fiorina's reign but was a stellar performer during the first few years of Mark Hurd's tenure.
Looking at who's coming and going offers hints at what changes might be afoot. Let's start with CEO Leo Apotheker, formerly CEO of software titan SAP
Know your customer
The new board will have more relevant industry background, another plus. Three departing directors have backgrounds in media and medical technology, which are not related to HP's business. In contrast, incoming director Patricia Russo is CEO of Alcatel-Lucent
Incoming directors Dominique Senequier and Shumeet Banerji bring international perspective, as does CEO Apotheker. With 64% of revenue coming from international markets, and with growth in many developing countries expected to outpace domestic growth, a more international board is an improvement.
Change is in the air
With two incoming directors -- Banerji (CEO of Booz & Company) and Gary Reiner -- having experience at strategy-consulting firms, there may be a strategy re-evaluation in the cards. HP's plan thus far has largely seemed to be to cut costs and improve execution to better compete with market leaders. (The exception was the printing business, where HP was defending a leadership position. Yet even there, efforts to compete with Xerox
Reiner and Senequier have private-equity experience, so acquisitions will probably continue to be central to HP's growth strategy. We may also be getting a sign that divestitures are in HP's future. Savvy divestitures have been an important element of IBM's
Finally, other high-level changes may signal intentional shifts from consumer to enterprise experience in HP's C-suite. Chief Marketing Officer and former Disney executive Michael Mendenhall is leaving. Bill Wohl, formerly VP of Global Communications for SAP, was recently appointed to the newly created position of chief communications officer.
Mark Hurd did an excellent job of lowering costs and improving execution. Now the low-hanging fruit is gone and HP's opportunities are more strategic. Whether HP's new CEO and board are better suited to the task remains to be seen. Investors can also only hope that the new team plays well with others and ends the boardroom drama.
More on Hewlett-Packard:
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- Apple Takes a Bite of HP
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