Hewlett Packard Enterprise will be run by an engineer
Hewlett Packard Enterprise Co. is going back to its roots.
The company now known as HPE will be run by an engineer for the first time in almost two decades, now that Antonio Neri is succeeding Meg Whitman as chief executive officer.
“The next CEO of the company needs to be a deeper technologist, and that’s exactly what Antonio is,” Whitman said this week on a conference call discussing the succession plan.
HPE, formed in the breakup of Hewlett-Packard Co.’s corporate-computing divisions from its printer and PC business in 2015, could use an injection of the technological prowess that characterized its early years when its predecessor — famously founded in a garage in Palo Alto, Calif., in 1939 — pioneered inventions in areas such as atomic clocks, inkjet printers and scientific handheld calculators. Whitman, a former CEO of EBay Inc. who holds an MBA from Harvard University, brought expertise in shaping strategy and streamlining operations. Besides overseeing the split, she made acquisitions such as Silicon Graphics and Nimble Storage, while also sharpening the company’s focus on shareholder returns and slashing more than 80,000 jobs.
Even so, Whitman had a tougher time navigating the technological shifts — like increased reliance on cloud computing -- that made it harder for HPE to compete with newer and more agile competitors such as Amazon.com Inc. That’s where Neri, who graduated from Escuela Nacional de Educacion Tecnica in Argentina, will need to draw on his background in engineering and his work helping develop and introduce new products at HPE and its predecessor company.
HPE’s elevation of an executive with engineering chops echoes the move by Microsoft in 2014 to appoint Satya Nadella as CEO to succeed Steve Ballmer, who rose through Microsoft’s sales organization to take over from cofounder Bill Gates. While Ballmer was adept at amassing a mammoth cash pile and addressing needs of large corporate customers, he largely failed to position Microsoft for the mobile computing revolution.
Just how daunting a task lies ahead for Neri, who takes over Feb. 1, was made plain this week when HPE gave a forecast for earnings in the fiscal first quarter that missed analysts’ estimates. Revenue in the fourth quarter also fell short of projections. The company said its server business will see some declines next year, and the pricing environment isn’t expected to improve. HPE’s 2018 operating margin will be about 11 percent to 12 percent, CFO Tim Stonesifer said. Margins in the first quarter may be pressured, but will improve throughout the year, he said.
Whitman inherited a company whose leadership had already veered away from technologists. When Lewis Platt, who began his career at HP as an engineer in 1966, stepped down as CEO in 1999, the company appointed its first leader from outside the company — Carly Fiorina, a former star sales executive at Lucent Technologies. Under her leadership, HP purchased Houston-based Compaq. Following her ouster in 2005, the computer maker tapped Mark Hurd, who as chief operating officer of NCR Corp. was known for successes in improving efficiency.
Hurd resigned in 2010, and was eventually replaced by former SAP CEO Leo Apotheker, another executive who had risen through the sales ranks rather than the scientific ones. Whitman was brought in about a year later when Apotheker was fired.
Whitman, 61, one of the most high-profile women in the technology industry, will remain on the board of Hewlett Packard Enterprise. She took over Hewlett-Packard Co. after it suffered a series of missed targets amid rising competition under her predecessor. She set about slashing jobs and dramatically resetting investors’ expectations for how well the company could perform at a time when customers were adopting cloud computing services HP was ill-equipped to provide. After initially opposing efforts to break up the company, she eventually agreed to split Hewlett Packard’s PC and printing units from higher-margin businesses aimed at corporate computing.
The CEO position is a different job now than what it was when Whitman first took over, and will focus more on the operational aspects of the company, said David Heger, an analyst at Edward Jones & Co.
“They’re at a point now where they need a different skill set than what she offered,” he said. “They’re finished with doing spinoffs and re-engineering, and now what they have left is what they’re going to focus on going forward.”