HP's stock is in the tank, here's why its CEO won't be fired

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Dec. 31 saw the close of Meg Whitman's first full year as CEO of Hewlett-Packard Co. It was also a year that saw the company's shares fall 45 per cent, making it easily the worst performer in the Dow Jones Industrial Average and one of the five worst in all of the S&P 500.

That would be enough to send many CEOs packing. But probably not Ms. Whitman – meaning she's a CEO that shareholders are stuck with for 2013.

Why? Well, it's fair to say HP had a few problems before she became CEO. A lot of problems, really.

The company's multi-year effort to move away from commodity PCs and toward higher-margin consulting with corporate America has been overshadowed by a never-ending stream of stumbles and fumbles from the boardroom on down.

This is familiar history to many, as the story of how HP has fallen from a U.S. tech pioneer to laughingstock has been one of the most compelling corporate tales for some time.

To recap some of the most immediate history:

• HP turned from value play to basket case under CEO Léo Apotheker, a former executive at European software company SAP.
• Mr. Apotheker wasn’t given much of a chance to succeed at HP – the board sacked him less than a year after his hiring.
• All of his major moves have since been reversed or have already soured.
• Chief among them: the $10-billion purchase of Autonomy, an enterprise software company, in October 2011.
• By November 2012, HP took a charge against earnings of nearly $9-billion, alleging “serious accounting improprieties” at Autonomy.

Former Autonomy CEO Mike Lynch denies those charges and has accused HP of mismanaging Autonomy, colourfully telling the New York Times "It was like walking into an airplane that's on fire where the pilots are having a punch-up."

There's a case to be made that since Ms. Whitman was on the board of directors when it made the Autonomy deal, she should be held responsible for that – as well as some or all of the share-price erosion since.

Alas, the company has forced out three CEOs (Mr. Apotheker, Mark Hurd and Carly Fiorina) in the last seven years, and, counting interim leaders, has had six people in the top spot since the beginning of 2005.

The company needs stability as badly as it needs a strategy; and while Ms. Whitman hasn't yet made the case as to how the gigantic HP can grow again, she's very much immersed in straightening out the mess created by past leaders. She probably has all of 2013 to do it.