Can Meg Whitman save HP?

The decision was swift and made without a formal CEO search, drawing further criticism against HP’s board, and analysts are uncertain that she is the right choice to turn the ailing technology giant around.

“Whitman lacks experience running a global enterprise IT vendor, but she does have experience as an enterprise IT customer (as CEO of EBay), and understands the value of consulting services (having started her career at Bain),” said Ovum Services analysts Jens Butler and John Madden in a joint statement. 

Ovum’s analysts also raised doubts as to HP’s determination to cling to a strategy that places services, particularly its outsourcing and global delivery capabilities, at its centre. “HP’s services business has struggled for years with flat to single-digit quarterly revenue growth, the result of a drawn-out and arduous integration of its EDS acquisition, and a strategy that has failed to meet market and customer expectations,” they observed.

In a report by Reuters, Stern Agee analyst Shaw Wu noted that an ideal candidate for HP should have extensive experience in the enterprise market, something Whitman lacks despite her glowing track record at eBay.

Collins Stewart analyst Louis Miscioscia shares Wu’s concerns on Whitman’s lack of experience with enterprise. “Whitman has not run a company the size of HP, nor one focused on the enterprise, both of which are concerns that are made more important by the fact that HP is in need of a turnaround in many lines of business,” he commented in a research note.

Even if Whitman were the ideal candidate, the job ahead of her is a tough one. So far, Whitman and the board are still determined to spin off HP’s computer business and acquire software firm Autonomy for US$11.7 billion, neither of which analysts are thrilled about.

Stee Agee analyst Wu also noted that HP should consider keeping its PC unit. ““We estimate the business generates $2 billion in operating income per year and is the second most profitable behind Apple,” he wrote.

Jeffries and Co. analyst Peter Misek observed that while HP may still decide to keep its PC business, it can’t get out of the Autonomy Software acquisition deal. “Corporate takeovers are governed by strict laws in the U.K., making it nearly impossible for HP to pull out of the deal now,” he said.