Apotheker's Organizational Shake-Up Aligns with HP's New Strategic Direction

PC giant Hewlett Packard (NYSE:HPQ) announced some significant organizational changes to better realign CEO Leo Apotheker's direct reports with his new strategic vision.

Ann Livermore, head of HP's Enterprise Business, was elected to the board and will step down from her day-to-day management role except to serve as the interim lead for HP Services until that spot is filled, which market analysts believe will most likely be an external candidate.

Since 2004, Livermore, aged 52, has been heading HP's Enterprise Business, a $30 billion-plus business that encompasses storage and servers, software and services.

Livermore, who has joined HP in 1982, was twice recommended for the CEO job when Carly Fiorina and Mark Hurd left the scene in February 2005 and August 2010, respectively.

Now, to better align with HP's Enterprise focus, three of Livermore's executive vice presidents (EVPs) have been elevated to report directly to Apotheker, including Dave Donatelli (Enterprise Servers, Storage, Networking and Technology Services), Bill Veghte (Software), and Jan Zadak (Global Sales).

Separately, Todd Bradley (EVP, Personal Systems Group) will lead efforts in China and Vyomesh Joshi (EVP, Imaging and Printing Group) will be the new lead in India, as HP's increased focus on these two important markets warranted a move to assign EVP sponsors in addition to the country and regional managers.

We believe HP's organizational changes will not be viewed as a surprise to most investors, except for the fact that they were likely not as deep as some feared, Susquehanna Financial analyst Jeffrey Fidacaro wrote in a note to clients.

Fidacaro, who has a neutral rating on HP stock, said though the restructuring was mostly expected by the Street with few surprises and is a positive step forward, it will take some time before all of the pieces fall into place.

Also, it will take time for the organizational changes to show material improvement on HP's fundamentals and its targeted investments, particularly in HP Services.

In September 2010, HP's board elected Apotheker as the company's Chief Executive Officer and President, effective November 1.

Apotheker, an ex-CEO of German business software maker SAP AG, succeeded Cathie Lesjak, who served as the company's interim CEO since August 6, following the abrupt departure of former CEO Mark Hurd. Hurd had been forced to resign after an internal investigation into a sexual harassment claim uncovered expense-account irregularities.

Apotheker's appointment was followed by a shake-up of the board of directors, the development of a new strategic road map in March 2011 around Cloud, connectivity and software, and now a significant realignment at the executive level.

Shares of HP closed Monday's regular trading session at $34.65 on the New York Stock Exchange.