Tech CEOs on the hot seat
Leo Apotheker, HP
The tech field shifts so quickly that once-great companies can turn into afterthoughts in the blink of an eye.
That's a pressing problem for a number of top CEOs right now. The industry is confronting a post-PC, mobile, social and highly inter-connected world -- one that may leave some existing giants behind.
Hewlett-Packard is a prime example. With a heavy reliance on low-margin businesses like personal computers and printing, as well as an under-investment in its flat-lining services unit, HP is badly in need of a makeover.
CEO Leo Apotheker has started his overhaul. Last week, he announced an accelerated plan to ramp up HP's services business -- after blaming former CEO Mark Hurd for the division's woes. In March, Apotheker unveiled the company's new strategy, which puts a greater focus on software and servers.
But investors remain unconvinced. HP's stock has fallen 16% since Apotheker took over as CEO in November, and shares nosedived after his latest outlook came in below Wall Street's and HP's prior forecasts.
Many analysts urged patience, saying that investors are overreacting to HP's struggles. The company's current market capitalization is about two-thirds its annual revenue.
But others believe Apotheker simply isn't the right man for the job. He doesn't carry the greatest track record: He was ousted as the head of German software giant SAP last February.
"He's going to have to take more risks," said Joel Achramowicz, analyst at Blaylock Robert Van. "After two quarters of tenure it's still the same HP. He's applied a thin patina of cloud to the equation, but I just don't think he can do what's necessary there without shaking up the cart and doing something aggressive and provocative."
By David Goldman
Carol Bartz, Yahoo
Yahoo has a lot of promise, but not a whole lot of execution. It's getting to be "put up or shut up" time for Carol Bartz.
The company's stock is actually up 33% since she was named CEO in January 2009. Investors have mostly cheered Bartz's decision to focus on the company's wealth of content over search, leveraging Yahoo's status as one of the largest Web properties in the world. Yahoo has also amassed an impressive array of international Web assets, including some prominent ones in high-growth areas like China.
Ah, if only life were only that easy. Non-content companies like Google and have eaten away at Yahoo's lead in the display advertising market. Yahoo's decision to pawn off search to Microsoft hasn't yet paid off for either company, with technical snafus and disappointing revenue following the partnership.
Most recently, Yahoo shares plunged after the company disclosed in an SEC filing that it had lost access to a prized Chinese online payment service. Alipay, a division of Alibaba, of which Yahoo owns 40%, was transferred to another company owned by Alibaba CEO Jack Ma in August 2010.
Yahoo claimed that it was not aware of the move until March, but that only made investors more wary about how little control Yahoo seems to have over its Asian assets.
Yahoo is also facing questions about its social strategy -- or lack thereof -- as well as its mobile presence. Bartz's plate is looking awfully full these days.
John Chambers, Cisco
Cisco became one of the great Silicon Valley success stories on the back of John Chambers' savvy and market foresight.
But Cisco has struggled to grow in recent quarters, and Chambers' tone has become increasingly pessimistic. Shares have lost a third of their value over the past 12 months, and Cisco is the worst performer in the Dow Jones industrial average this year.
"Confidence is slowly eroding as more and more challenges come about, and these initiatives he has don't pan out with the speed that Wall Street wants," said Ken Dulaney, analyst at Gartner. "He needs to read the handwriting on the wall that he's going to have to change some of his long-held strategy."
To some degree, Chambers has shown that he understands changes need to be made. "We have acknowledged our challenges," Chambers said earlier this month during a conference call with financial analysts. "We know what we have to do."
In a memo sent to company employees last month, Chambers wrote that the company would take "bold steps" and make "tough decisions." Step one: Cisco killed off its Flip unit and streamlined its consumer business in April, and recently announced looming layoffs.
But investors aren't convinced that Chambers is doing enough to right the ship. Cisco has expanded into numerous markets beyond networking, yet the company hasn't been nimble enough to fend off growing threats from rivals HP and Juniper.
Many of the acquisitions it has made have failed to pan out, and analysts are calling for a narrower and tighter focus. Others wonder if Cisco can ever return to the double-digit growth it posted each quarter for more than a decade.
Even with all those challenges, most analysts think Chambers will be given time to clean up Cisco's mess.
"He's not going anywhere soon," said Dulaney. "He's got a good personality and a good following. But he's got to make bolder changes."
Jim Balsille & Mike Lazaridis, RIM
BlackBerry maker Research In Motion, once king of the smartphone world, is now struggling mightily to keep up.
Ever since Apple debuted the iPhone in 2007 and the iPad in 2010, RIM has been playing catch-up -- and largely failing to do so. It has been supplanted by both Apple and Google, and analysts expect Microsoft's Windows Phone will soon outpace BlackBerry sales as well.
It doesn't help that the best smartphone BlackBerry has to offer, the Torch, debuted eight months ago to mixed reviews and disappointing sales. The much-hyped PlayBook tablet was launched last month without critical tools like e-mail, contacts or calendar applications.
Shares are trading at less than a third of the stock's all-time high (set in August 2008), and are down about 26% this year.
"RIM's co-CEO's are under tremendous pressure," said Dan Hays, telecom consultant at PRTM. "A shakeup of RIM's management team is likely if they are unable to bridge the gap between the highly successful model that has carried them for the last decade and the new paradigm of open operating systems and third-party applications."
RIM's acquisition of QNX has been largely applauded, since it will finally bring a modern operating system to BlackBerry devices. But consumers are growing impatient, and competitors aren't waiting around for RIM to make its next move. Late last month, RIM cut its profit forecast for the current quarter due to lower than expected BlackBerry sales.
Steve Ballmer, Microsoft
A chart of Microsoft's stock performance over the past decade could easily be confused with an EKG: The line goes up and down in a tight range and generally follows the same path straight across.
Once the highest-valued tech company on the stock market, Microsoft has been surpassed by Apple last year and, this week, IBM.
All of this happened under Steve Ballmer's watch.
"Microsoft is already down to No. 3 in tech market cap from No. 1 (are they going to wait until he hits double-digits?), and its stock has gone nowhere in 10 years," Carl Howe, analyst at Yankee Group, said via e-mail. "Ballmer could be a world record for non-performance and still keeping his job."
Microsoft now faces serious questions about whether the company is equipped enough to survive in a post-PC world. The company sent up one promising signal this past quarter, when strong Office, Xbox and Kinect sales overshadowed slumping sales of Microsoft's signature Windows product. A smartphone tie-up with Nokia is also encouraging for Microsoft's future mobile prospects.
But long-term worries remain. Microsoft still doesn't have a legitimate tablet competitor, its online business is losing upwards of $1 billion a quarter, and consumer PC sales are falling faster and sooner than anticipated.
Analysts now question whether Microsoft under Ballmer has the will and direction to innovate its way out of the problem.
Howard Stringer, Sony
Bad news is pouring out of Sony like water from a faucet.
Shares have fallen 22% so far this year. Sales have slumped as consumer spending on gadgets has dropped off. Sony expects the Japanese earthquake to cost the company upwards of $2 billion.
And then there's the never-ending drama surrounding Sony's online gaming networks. Attackers hacked into the company's online PlayStation Network and its media streaming service Qriocity, stealing 77 million customers' personal information, including credit card numbers.
CEO Howard Stringer and Sony's top management bungled the situation, taking nearly a week to disclose the hack and more than a month to fully understand and resolve the issue. The network has been up and down over the past several weeks, as Sony continues to discover new exploits and has been subjected to even more hacks.
Stringer named Sony Entertainment CEO Kazuo Hirai as his heir apparent in March. Despite widespread speculation that he is on his way out, Stringer has not discussed a timetable for his departure.
Paul Otellini, Intel
Intel and Microsoft's symbiotic relationship has been beneficial for nearly three decades. But as the tide shifts away from PCs and toward low-powered microchips for small, mobile devices, both companies may suffer the same unlucky fate together.
"Intel has the same 'stock has gone nowhere in a decade' problem as Microsoft, and Otellini faces the possibility that the mobile market may not need Intel," said Yankee Group's Howe.
Paul Otellini has been Intel's CEO for exactly five years, and the company's stock is trading at exactly the same price it was in May 2005.
Otellini's biggest challenge has been that despite many breakthroughs in silicon chip performance, including most recently a 3-D chip design, Intel is finding that the desire for raw power is being replaced by a need for processors that sip power.
Microchips designed for rival ARM's platform are being used in most mobile devices, which are far outpacing growth of PCs, laptops and netbooks -- Intel's stronghold. Even Microsoft announced that the next version of Windows will work on the ARM platform for the first time.
Intel's latest announcements have largely focused on partnership deals for and improvements to its Atom-branded processors, which are designed for mobile devices. The demonstrations are encouraging, but analysts wonder if Intel is too late to the game -- and whether Intel needs a new vision from the top.
Credit: CNN (www.cnn.com)
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