HP's Whitman Shakes Up Executive Team To Drive Sales Growth

Hewlett-Packard CEO Meg Whitman Tuesday shook up her management team putting HP COO Bill Veghte in charge of the company's struggling enterprise group business.

Veghte replaces HP Enterprise Group Executive Vice President Dave Donatelli, who is taking on a new role focused on identifying early-stage technologies as he did successfully with 3PAR and 3Com.

HP said Veghte's software enterprise experience will help HP "accelerate innovation in converged infrastructure, cloud and the emerging area of software-defined data centers."

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Veghte, who has sometimes been referred to as the most likely successor to Whitman, will retain his current responsibility for the "pan-HP cloud initiative."

HP said that since the HP Enterprise Group provides the "foundational infrastructure for all of HP's cloud offerings," the alignment of the cloud and enterprise group portfolio under a "single leader will improve time to market for HP's Converged Cloud solutions."

Whitman is also revving up the HP marketing machine by combining its Marketing and Communications organizations under Chief Communications Officer Henry Gomez. The company's current CMO, Marty Homlish, will become HP's chief customer experience officer, a new role that will focus on driving more consistent and high-value interactions with customers across all business units.

HP partners said the shakeup is aimed at accelerating sales growth in 2014.

"This is all about driving sales growth in 2014," said the CEO for one of HP's top enterprise partners, who did not want to be identified. "Meg is realigning the executive management team from a legacy HP model to a future growth opportunity model that absolutely includes the channel. The HP sales model is antiquated. She is building clarity around her executive management team to drive sales growth. Its all about clarity, focus and growth."

The announcement came at the same time HP reported non-GAAP diluted earning per share of 86 cents per share for its third fiscal quarter ended July 31, down 14 percent from the year ago quarter. HP sales in the quarter were $27.2 billion, down 8 percent from the same quarter one year ago.

HP's enterprise business in the quarter was down 9 percent to $20.58 billion compared with $22.32 billion in the year ago quarter.

The enterprise group changing of the guard comes with HP rival Dell gaining global unit server shipment share even as it moves to complete a $24.8 billion leveraged buyout.

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Dell's worldwide server unit shipments rose in the second quarter as rivals HP and IBM lost ground, according to sources who have seen the preliminary data from market researcher IDC.

Dell's server unit shipments in the second quarter were up 4.8 percent to 552,486 units, just 28,684 units behind No. 1 global shipment winner HP, whose global shipments declined 13.6 percent to 581,170 units during the quarter, said sources who have seen the preliminary data from market researcher IDC.

"Meg is making people accountable -- they have to produce or they are out," said an HP enterprise partner, who did not want to be identified. "Dave Donatelli has lost server share to Dell. How do you lose server share to a company that is in the midst of leveraged buyout from a corporate raider? The enterprise numbers are down. She is sending the message internally to HP employees that no one's job is secure if they don't perform. And she is definitely backing up what she is saying as far as embracing the channel. She wants sales growth, and she is going to drive that from her top lieutenants on down. She is making her top lieutenants accountable for driving sales growth."

HP partners need to step up hand in hand with HP to drive sales growth in the wake of robust new partner incentives, said the CEO. "This is going to enhance HP's channel commitment," he said. "The more she gets the channel involved the more sales growth we will see."

In a prepared statement, Whitman said that Veghte's "vision for the future of IT, his breadth of experience in the industry and at HP, and his deep enterprise experience, make him the ideal candidate to help HP navigate a rapidly changing market."

HP said that Donatelli's new role will focus on identifying early-stage companies with new technologies, similar to HP Moonshot and HP StoreOnce. HP said Donatelli will work with "select venture capital firms to explore targeted companies in their pipelines." Donatelli will continue to report to Whitman.

PUBLISHED AUG. 21, 2013