Hewlett-Packard Co. president and CEO Meg Whitman has been consistent in making clear her turnaround plan for the tech giant will take time. That was reinforced with the release Wednesday of mixed third quarter earnings figures, earnings that prompted more executive movement in HP’s senior executive ranks.
HP reported an eight per cent drop in revenue, which missed Wall Street expectations, although it did improve an $8.9 billion loss a year ago into $1.4 billion in net income. Whitman warned though that further revenue pressure on revenue is likely and growth shouldn’t be expected. The enterprise group was singled-out though, with a nine per cent revenue drop and ongoing business model challenges.
“Our overall EG profitability was pressured by lower revenue, particularly in industry standard servers. The net impact of execution challenges, competitive pricing, and a misaligned go to market model is an expected loss of five points of market share on a revenue basis in industry standard servers,” said Whitman.
That may be why Whitman decided to shuffle out David Donatelli as the head of HP’s enterprise servers, storage and networking (ESSN) business, for a new role looking for early-stage startups HP could potentially acquire to grow its business. Donatelli, who HP poached from networking rival EMC in 2009 to lead its networking business, had been touted as a future HP CEO.
Tagging in for Donatelli will be Bill Veghte, who will leave his role as HP’s COO to become executive vice-president and general manager of the HP Enterprise Group, and the role will be expanded to include responsibility for the coordinated development of HP’s portfolio of cloud solutions. Veghte has also run HP’s software business, and came to HP from Microsoft.
“Bill’s vision for the future of IT, his breadth of experience in the industry and at HP, and his deep enterprise experience, make him the ideal candidate to help HP navigate a rapidly changing market,” said Whitman. “Dave succeeded in pioneering converged infrastructure, bridging servers, storage and networking. Looking forward, the software-defined data center and cloud computing offers us a great opportunity to extend HP’s leadership in the technology infrastructure space.”
Whitman signaled that software, an area in which Veghte has experience, will be important to turning around HP’s server business.
“As hardware becomes more standardized, leadership solutions are increasingly differentiated by the software layer that drives the hardware. Bill’s experiences in software, and in the enterprise, combined with HP’s infrastructure leadership, will help HP accelerate innovation in converged infrastructure, cloud, and the emerging area of software-defined data centres,” said Whitman.