The last couple of weeks have seen amazing announcements by giant American tech companies. However, all the announcements were linked by how horribly they were handled by the respective corporate leaderships.
First, Hewlett-Packard, in one earnings call, 18 August, 2011, not only killed all production on webOS-based hardware, the Veer, the TouchPad and Pre 3, but effectively killed the future of the webOS operating system. However, this was collateral damage compared to what HP CEO Leo Apotheker did to the Personal Systems Group (PSG), the part of the company that actually makes laptops, desktops, monitors and printers. Mr. Apotheker announced that:
“We see the opportunity for PSG to compete and win in the PC marketplace and our Board has authorized to us explore strategic alternatives for PSG. We intend to evaluate a range of options that may include, among others, a separation of PSG from HP to a spinoff or other transaction.”
In plain language, Apotheker said “We want to get out of the manufacturing business because we think we are not making enough money. Will someone please buy this part of the company?” Not only did the value of the stock of HP drop twenty percent the next day, over time it became clear that no one wanted to buy the PSG and existing customers put purchases on hold and considered making equipment purchases elsewhere than HP.
Second, America Online (AOL), who owns many tech blogging sites such as Engadget, purchased the tech blogging site TechCrunch from its founder Michael Arrington about this time last year for a reported $30 million US. A few months later, AOL purchased the Huffington Post and the services of its founder Arianna Huffington as the head of a AOL Media Group, to whom Mike Arrington would be reporting as editor in chief of TechCrunch. Fast forward to last Thursday where Mike Arrington announces his formation of a new venture capital firm, CrunchFund. AOL announced it was investing $10 million USD in the venture. Additionally, Mike Arrington would continue at TechCrunch. Normally American journalists are not allowed to report on companies that they may have a financial interest in, so this arrangement resulted in a great deal of criticism.
Any ethical criticism of Mr. Arrington’s continued role at TechCrunch was immediately overshadowed by the reaction of Arianna Huffington, who was apparently never informed or consulted about the new venture of Mr. Arrington, and who stated that Mr. Arrington was finished at TechCrunch and no longer worked for AOL Media. Later, an AOL spokesman confirmed that Arrington no longer worked for AOL at all. Both of these statements contradicted statements that AOL’s CEO, made to the media less than 24 hours before. Finally, it was stated that Mr. Arrington did still work for AOL in something called AOL Ventures. The confusion is still ongoing as evidenced by posts by both a TechCrunch reporter and Mr. Arrington himself. The story is ongoing and it still is not clear what is going on.
Most recently, Carol Bartz was fired as CEO of troubled American search engine company Yahoo. The firing itself was not that unusual: the fact that it was done over the phone was. We know that Ms. Bartz was fired over the phone because she let the entire company know it through an all hands e-mail to Yahoo staffers that was “sent from her iPad”. Normally, a CEO of a major corporation is told face to face that their services are no longer required and usually given time to get the office cleaned out before the change is announced. If a CEO is fired as was Ms. Bartz, then it usually means police officers are waiting to carry them off. This is not the case here, as reports are surfacing that the firing snub will be cushioned by a $10.4 million USD severance package. It’s now being reported that Yahoo’s Chairman of the Board, Roy Bostock, was in the air traveling to the western US and Ms. Bartz was likewise traveling east at the time of the firing. Once the decision to sack Ms. Bartz was made, it was thought best to get the news to her as soon as possible. That excuse does not wash because the movements of CEOs of major corporations are mapped out well in advance, and the chairman of the board is certainly privy to that information. If a large corporation is taking a decision to let the head of the company go, then prudent thinking would require knowing where the head that you are putting on the chopping block is going to be.
Is this a pattern of corporate miss-steps, or just odd happenstance? Only time will tell.