* HP board meets on Wednesday
* Wall Street roars approval, shares close 6.6 pct higher
* Apotheker's tenure marked by controversial decisions
(Adds details on Autonomy acquisition, adds closing share
By Poornima Gupta and Edwin Chan
Sept 21 Hewlett-Packard Co's (HPQ.N) board
convened on Wednesday to consider ousting Chief Executive
Officer Leo Apotheker after less than a year on the job and
replacing him temporarily with former eBay (EBAY.O) CEO Meg
Whitman, a source familiar with the matter said.
The board of directors -- facing shareholder lawsuits and
intensifying criticism from investors -- is thrashing out a
host of issues, including whether to name Whitman as the
interim CEO, the source told Reuters,
HP is trying to contain a crisis of credibility on multiple
fronts, starting with its leadership. No decisions have yet
been made about leadership, the source said on condition of
anonymity because of the sensitivity of the issue.
If Apotheker is let go, he would be the third CEO in a row
to be ousted by the board of the largest U.S. technology
company by sales. [ID:nS1E78K1DH]
Wall Street wasted no time in roaring its approval, sending
HP shares up 6.6 percent to close at $23.96, a gain of $3
billion on the day in the company's market value. (For a
Breaking Views column on HP, see: [ID:nS1E78K13F]
Analysts say the odds may have been stacked against
Apotheker from the beginning. Venture capitalist Ray Lane, who
this year assumed chairmanship of an often-lambasted but
powerful board, has argued that previous management
underinvested in areas including software and services.
"He was doomed from the beginning," said Ticonderoga
Securities analyst Brian White. "The die was cast for whoever
stepped into that position."
Investors seemed to approve of Whitman, a billionaire who
joined HP's board this year on an interim basis after a failed
bid to become California's governor.
Apotheker, former CEO of German business software maker SAP
AG (SAPG.DE), was a surprise choice to replace the popular Mark
Hurd, who was ousted last year after a scandal involving
expense reports and a female contractor.
Before Hurd came Carly Fiorina -- like Whitman, a candidate
for California political office -- whom investors blamed for
betting on a sunset PC industry by buying Compaq. She was
eventually fired by the board.
HP's latest chief is facing similar investor criticism.
During his tenure, Apotheker slashed sales forecasts
repeatedly, backtracked on promises to integrate Palm's webOS
software into devices, and struggled to halt a 50 percent
plunge in the share price.
Apotheker's possible exit has been viewed by some as merely
a matter of time. Chairman Lane had been taking a more visible
role in the past few weeks, including accompanying the CEO to
visit investors to communicate and clarify HP's strategy.
Last week, he replaced Apotheker at an industry conference
to defend HP's change in strategy and clear the confusion that
followed in the market.
Representatives for Whitman, whose track record at eBay
came under attack during her campaign, did not respond to
requests for comment. Representatives for HP and the board did
not respond to requests for comment.
A STUDY IN DYSFUNCTION
In August, HP again frustrated investors by killing off a
much-touted line of mobile devices including the TouchPad and
declaring it may spin off its massive PC division. Apotheker
also spearheaded a deal to buy British software maker Autonomy
AUTN.L that many considered too costly.
HP has been faced withering criticism from Wall Street and
a raft of shareholder lawsuits over its recent strategic
decisions and how it communicated them.
Especially rankling to investors was its decision to fork
over close to $12 billion for Autonomy, without clarifying how
the niche maker of cloud-computing software would fit into or
help drive a sprawling empire that spans computers, printers,
software and enterprise IT solutions.
"It was unanimously agreed to," said a second source
familiar with the situation, referring to the Autonomy deal.
"The board was a big part of this."
The pricey Autonomy deal is hard to walk away from, even if
HP wanted to, this person said, adding that he did not think
the deal was an issue right now.
HP's board has been held up as a model of dysfunction since
the wiretapping scandal of a few years ago, when HP counsel and
board chairwoman Patricia Dunn authorized electronic
eavesdropping on directors and journalists to try to plug a
series of media leaks.
That scandal, forever associated with a storied company
hailed as a cornerstone of Silicon Valley, forced the
resignation of Dunn.
Wall Street now awaits HP's decision on future leadership.
News of Apotheker's potential ouster was first reported by
(Reporting by Edwin Chan in Los Angeles, Poornima Gupta in San
Francisco and Paritosh Bansal in New York; editing by Lisa Von
Ahn and Matthew Lewis)