HP replaces Leo Apotheker with Meg Whitman as new CEO

SAN FRANCISCO -- Hewlett-Packard on Thursday named Meg Whitman CEO, ending the disastrous 10-month run of Leo Apotheker.

"In the end, the only thing we can do is deliver results," Whitman, who became an HP director earlier this year, said in a conference call after the announcement.

The ouster of Apotheker, who also lasted less than a year as CEO of SAP, didn't happen overnight. "It was an incremental decision," says Lane, pointing to the board's mounting frustration with missed sales forecasts and the poor handling of HP's announcement last month to spin off or sell its multibillion-dollar PC division.

But investors are just as frustrated with HP's board, which has burned through two CEOs — Apotheker and Mark Hurd— in rapid succession. "The board's got to go," says Roger Kay, president of Endpoint Technologies Associates. Several members of the board joined this year.

The crisis is deep. At a time when consumers increasingly are snapping up smartphones and tablets in lieu of lower-cost PCs, HP decided to switch course. Apotheker wanted to transform HP into a provider of more profitable software and services for businesses, like IBM and others. HP still may follow that course, says Frank Gillett, analyst at Forrester Research. "That clearly is the right long-term strategy," he says.

Rumblings of Apotheker's ouster gained steam this week, prompting HP's board to powwow Thursday to hash out issues. One topic was canning Apotheker, who slashed sales forecasts, reneged on promises to integrate mobile software into devices and faced a slumping stock price. HP shares fell 5%, to $22.80, Thursday before the Whitman appointment.

Apotheker will get a handsome severance package, including $7.2 million in pay and bonuses and stock worth about $3.5 million, based on Thursday's closing price. He also gets to keep the $8.6 million bonus and relocation assistance he received in the 2011 employment contract he signed last November, according to company filings. Hurd received severance valued at about $37 million when he was ousted in August 2010.