Hewlett-Packard Co named former eBay Inc Chief Executive Meg Whitman its president and CEO, replacing the harshly criticized Leo Apotheker in a bid to restore investor confidence in the iconic Silicon Valley company.

The decision was made without a formal CEO search and piled renewed criticism on the board, which investors have blamed -- at least in part -- for the storied company's recent missteps.

Chairman Ray Lane, who becomes Executive Chairman with a mandate to help Whitman run a sprawling $120 billion empire with over 300,000 employees, tried to assure disillusioned investors by saying HP is making a fresh start with a new CEO and -- crucially -- a virtually revamped board of directors.

Lane vowed that the days of board dysfunction -- the wire-tapping scandal, the firing of Mark Hurd after a sexual harassment probe, and the hiring of Apotheker -- were over.

The board works well together, he said.

It's amazing how they challenge the management team, challenge each other, Lane said in an interview. They are smart, they bring great insight to the table and I think we make good decisions.

Analysts had speculated that Apotheker's departure might presage a backtracking on major decisions taken during his 11-month term and announced -- back to back in haphazard fashion -- on August 18. But HP reassured investors on a conference call the board will not reverse course.

I don't think we ought to be going back in history. This board did not select Leo. This is not the board that was around for pretexting, Lane said, referring to the scandal in which HP hired investigators who impersonated its board members and journalists to obtain their phone records.

This is not the board that fired Mark Hurd, he noted. We are embarrassed about the communications of decisions that could have been done much better. But we carefully considered the decisions made. It is our operating execution that needs to improve.

Whitman, an Internet retail expert with a mixed track record, is not an obvious choice to revive HP, analysts said. The failed California gubernatorial candidate transformed eBay from a few dozen employees in 1998 into a global Internet retail powerhouse, but the final years of her reign were marked by sputtering growth, intensifying Wall Street criticism and a string of unwise acquisitions, including of Skype.

She has been an HP director about eight months. While her elevation surprised many with its seeming hastiness -- for the second time, internal candidates such as enterprise chief David Donatelli were passed over -- Apotheker's ejection had been a matter of time.

He becomes the third straight HP CEO shown the door.

Some might be saying maybe Meg Whitman isn't the right person, either. She's not a hardware person, said Auriga analyst Kevin Hunt. But HP just needs someone to set the direction.

Defending her track record, Whitman said as head of eBay she had been a major purchaser of HP enterprise products.

So I actually understand this space relatively well, she told Reuters in an interview. What I bring to this table is leadership, management skills, strategic vision, communications and an execution orientation to deliver the result.

Whitman said HP remained committed to completing a review of its PC division before the year ends, and expected to close the pricey $12 billion acquisition of British software maker Autonomy Corp Plc as planned.

HP's shares closed down 4.8 percent at $22.80, wiping out much of Wednesday's 6.6 percent gain.

We would view any decision not to conduct a comprehensive search of internal and external candidates for a permanent CEO role as unsatisfactory and unnecessarily hasty, Sanford Bernstein analyst Toni Sacconaghi, who has been openly critical of HP's board, wrote in a note earlier on Thursday.

Lane, however, fired back by saying Whitman was handpicked for her communication, people and execution skills, while Apotheker fell short on several fronts.

Lane himself will also be taking on a bigger role in the company as executive chairman.

I am here to help Meg execute on the business, Lane said. I will be standing behind her and I will be working in areas that maybe I can help with a little more than she can do herself.

QUESTIONS?

In less than a year on the job, Apotheker, formerly SAP AG CEO, slashed HP's forecasts for three straight quarters and struggled to reverse a 50 percent plunge in the share price.

The storied Silicon Valley computer maker is fighting to restore its crumbling credibility. Whitman has to galvanize growth at a company that gets more than a third of its revenue from a slowing European economy, and is struggling to offset sliding PC revenue with services and software.

We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead, said Lane.

Whitman's record at eBay came under scrutiny during her failed campaign for California's governorship. Analysts question whether her stewardship of eBay prepared her to steer a sprawling enterprise and computer giant.

The billionaire is credited with catapulting eBay into the upper echelons of a then-nascent e-commerce arena, and taking it public. But critics note she pushed hard to acquire Internet telephony service Skype, beginning a long and ultimately fruitless attempt to wring value from it. EBay eventually unloaded it, and it ended up with Microsoft Corp.

Her successor, John Donahoe, spent years engineering a turnaround and trying to rekindle stalled growth.

While we believe she has proven to be a very capable manager helping grow eBay from a start-up into one of the largest Internet companies, we think an ideal candidate for HP should have extensive experience in the enterprise market, Stern Agee analyst Shaw Wu said in a client note.

Better choices would include HP enterprise chief Dave Donatelli and PC head Todd Bradley, two names that had also made the rounds in Silicon Valley for the top job after Mark Hurd's ouster in August 2010, he added.

On a more personal level, opponents and media on the campaign trail last year raised questions about Whitman's fierce temper and imperious manner with employees, and even about her integrity after it emerged that the wealthy former CEO had employed an illegal alien maid.

Whitman has her work cut out to try and turn the lumbering ship around. On Thursday, Chief Financial Officer Cathie Lesjak warned that HP's revenue outlook remained uncertain with Europe still soft and public spending weak.

But she made it clear it was imperative to speed up discussions around the personal systems group, or PC division.

This decision is not like fine wine. It's not going to get better with age, Whitman said. I am going into this with an open mind.

(Writing by Edwin Chan; Editing by Gunna Dickson, Gerald E. McCormick and Richard Chang)

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