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Intrigue obscures Hewlett-Packard's business

Michael Kanellos CNET News

Published: 03 Dec 2003 16:00 GMT

Will the merger between Hewlett-Packard and Compaq Computer ever stop being so entertaining?

A series of executive departures in the past few weeks demonstrate that the $19bn (£11bn) merger remains a work in progress, two years after it was first announced.

Last Tuesday, Jeff Clarke -- the former Compaq chief financial officer who helped engineer the merger -- suddenly resigned by "mutual agreement." Really? Only three weeks earlier, his employer had touted him as an example of a valued Compaq alumnus HP had worked hard to retain. Earlier in November, Webb McKinney, the other half of the integration team and one of HP's most respected executives, announced he was retiring.

Other departing executives include Susan Bowick, a 26-year HP veteran and former head of human resources, and Mary McDowell, who ran the Intel server group. In the previous months, a number of high-ranking server and storage executives departed for parts unknown.

On one level, all of these changes can be seen as independent events. Both McKinney and Bowick had been employed there for more than two decades. McDowell got an offer to become senior vice president and general manager of enterprise solutions at Nokia; a position that seems to hold more potential than her former, somewhat opaque position of senior vice president of strategy and corporate development at HP.

In addition, Hewlett-Packard is in the midst of making massive layoffs. Thousands of engineers, product managers and support staff have been cut. It's about time some high-ranking executives got released.

On another level, these departures could be seen as evidence of a company in flux. History abounds with such examples. After Compaq bought Digital Equipment in 1998, it, too, tried to integrate many of Digital's executives and product teams into the company's operations. But combining the two took longer than expected. Meanwhile, Compaq ran into financial trouble. Throw in a bruising price war and, voila -- 14 months later, chief executive Eckhard Pfeiffer was ousted, along with a whole gaggle of other execs. Another reorganisation followed, but it was too little, too late. Two years later, Compaq got swallowed up by HP.