Shakeup at HP

Electronic News, Jan 26, 1998 by Chad Fasca

Mountain View and Palo Alto, Calif.-- After 22 years at Hewlett Packard Company (HP), Richard E. Belluzzo has jumped ship, leaving the company to take over the helm of Silicon Graphics Inc. (SGI), the beleaguered high-end com- puter graphics company. The news broke late last week as Mr. Belluzzo was named chairman/CEO of SGI, succeeding Edward R. McCracken who resigned at the board's insistence last November (EN, Nov. 3, 1997).

Mr. Belluzzo's departure from HP was not a surprise, according to a company spokesperson. "It had become increasingly clear that he wanted to be a CEO," said the spokesperson who described him as a very talented executive. Accord- ing to the spokesperson, Mr. Belluzzo made several strategic contributions to HP including the development of HP's ink jet business. Also, when he was promoted to head the Computer organization in August 1995, he tackled a field re-organization to alter the way the company had dealt with its customers.

According to the spokesperson, the draw to lead SGI now, rather than wait the three or four years to become a candidate for the top spot at HP was "irresistible." HP has no succession plans in place, however the company has had a history of executives taking early retirement at age 60. This would leave the company roughly three or four years away from a possible top manage- ment change. Mr. Belluzzo, being one of only three executive VP/GM's at the company, would have been a leading candidate for the top post.

Instead, the former executive VP/GM of HP's computer organization, inherits a company struck by a shrinking Unix market and stiff competition from Sun Microsystems, Hewlett-Packard and IBM as it has struggled to transform itself from a high-end computer graphics company to one that can deliver servers to run businesses. Belluzo takes over a company that has lost money five out of the last six quarters. The company's net loss was $37 million on revenues of $768 million, for the first quarter of 1998. This was followed by a net loss for the second quarter, reported last week, of $31 million on much improved revenues of $851 million.

Despite a set of challenging transitions, we were able to restore a degree of momentum after a disappointing first quarter,said outgoing chairman/CEO Edward R. McCracken about the second quarter results.

Mr. Belluzzo will bring to SGI his experience at handling a much larger mul- ti-billion dollar business organization. The businesses under Mr. Belluzzo's charge at HP had combined annual revenues in excess of $35 billion. He was responsible for all of HP's computer products (printers, plotters, scanners and personal computers), computer systems (workstations, larger computer sys- tems and consulting) and its software and services group.

Taking over Mr. Belluzzo's responsibilities at HP on an interim basis is Lewis E. Platt, HP chairman, president and CEO.

"We'll miss Rick Belluzzo's many contributions to our Computer Organization, which he left in excellent shape, and wish him well as he takes the reins of another company," said Mr. Platt.

In addition to revealing that he would take responsiblity for the vacated post, Mr. Platt also disclosed that HP was making a series of changes to its organizational structure. In a nutshell, HP is consolidating its organizations and dropping its committee structure in favor of one executive committee.

One of the biggest moves made was the merging of HP's Test and Measurement and Measurement Systems organizations into the combined Measurement organization. The new entity will fall under the aegis of Edward W. (Ned) Barnholt, the highly regarded executive VP/GM who ran the Test and Measurement organization. He will add to his responsbilities those of departing Senior VP/GM Douglas K. Carnahan, who had led the Measurement Systems organization. Mr. Carnahan will retire after 30 years with the company.

According to an HP spokesperson, the move to consolidate the two measurement organizations had been in planning for more than a year, at which time it was known that Mr. Carnahan would retire. Mr. Carnahan will continue to assist with the merger of his former organization into the new Measurement organiza- tion before leaving at the end of May.

The new Measurement organization includes all the product groups associated with HP's electronic test and measurement business as well as the Medical Products group, Chemical Analysis group and Components group.

Mr. Platt also announced the creation of an executive committee and the dis- solution of several HP councils and their committees. The practice had developed over many years at HP, according to a company spokesperson, "how stuff accummulates in a garage--day by day." There was no particular flash point, but Mr. Platt made the decision that these committees made up of HP GM's had outlived their usefulness. According to the spokesperson, the meet- ings and committees require a lot of preparation time and follow-up work. "We think that we can do without them now," the spokesperson said.