Cisco CEO suggests Whitman will have hard time turning around HP

Tue Sep 25, 2012 10:34pm EDT

Chairman of the Board and CEO of Cisco John Chambers speaks at the Global Investment Conference 2012 in London July 26, 2012. REUTERS/Neil Hall

Chairman of the Board and CEO of Cisco John Chambers speaks at the Global Investment Conference 2012 in London July 26, 2012.

Credit: Reuters/Neil Hall

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(Reuters) - Meg Whitman faces a daunting task in trying to turn around Hewlett Packard -at least in the opinion of one of her chief rivals, Cisco Chief Executive John Chambers.

"There's not been a company ever turned around by the fifth CEO on the job," Chambers said in a wide-ranging interview with Reuters, referring to HP's management history.

Whitman replaced the harshly criticized Leo Apotheker at the helm of HP almost exactly one year ago in a bid to restore investor confidence in the iconic Silicon Valley company.

Chambers said there was potential for HP, the world's No. 1 personal computer maker, to grow in market transitions to cloud computing and the move from PCs to tablets, but the company may not be able to catch up. Cisco and HP compete in a number of areas such as networking equipment.

"Its a tough hand to play, but clearly as a competitor I like competing against that hand, and we are going to try and accelerate while they are struggling," Chambers said.

HP has continued to struggle since Whitman took the helm, posting an $8.9 billion loss for its fiscal third quarter ended July 31. Its shares on Tuesday hit a more than one-year low of $16.70, before nudging up a penny to close at $16.71.

Chambers softened his comments by saying that he is a "huge" Whitman supporter, pointing to his backing of her unsuccessful run for governor of California in 2010. He said he believes she took the chief executive job at Hewlett Packard in part because of her deep respect for the culture of Silicon Valley.

"She did it, I believe, because she cares about the Valley so much and HP is an integral part of the Valley," Chambers said.

Speaking to the shared interest among technology company CEOs in preserving Silicon Valley's distinct culture, Chambers related an experience he had during his early days at Cisco with another HP boss, Lew Platt.

Chambers said that when he first got to "the Valley," he didn't know anything about it so he asked Platt to teach him about the culture.

"He met with me, and I asked for the next quarter and he met with me again; three years later we met every quarter," Chambers recounted. "He let me bring my team and he would bring his team, after three years we were on a roll."

Years later, when Chambers asked Platt what was behind his generosity he replied, "John, this is what our culture is about."

(Editing by Peter Lauria and Leslie Adler)

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