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Meg Whitman Is Named Hewlett-Packard Chief

Hewlett-Packard replaced its embattled chief executive on Thursday with the former eBay chief executive Meg Whitman, saying that the company’s strategy to transform its business was sound, but that it needed new leadership to carry out the plan.

The upheaval at H.P. came after several weeks of mounting concerns among board members, senior executives and investors about how the former chief, Léo Apotheker, had handled a major strategy shift at the company announced last month, according to interviews with several people briefed on the board’s discussions.

While the board still endorses the strategy change — which includes a possible spinoff of its personal computer business, the closing of a line of mobile devices and the $11.7 billion acquisition of the software maker Autonomy — its members felt that Mr. Apotheker had bungled communicating the plans to H.P. employees and outsiders.

“It’s not about the strategy, it’s about the guy,” said one of the people with knowledge of the board’s discussions, who was not authorized to speak publicly.

In an interview, Ms. Whitman, who became a member of the board this year, said the process that had led to Mr. Apotheker’s ouster took place over about three months, and came to a head in late August. Once she was aware that she would be a candidate to succeed him, she said, she recused herself from the selection of a successor.

Talking about why she chose to accept the role, she said, “This is a chance to help turn around an American icon,” adding that “we’ve got our hands full.”

In an earlier conference call with Wall Street analysts, Ray Lane, the company’s executive chairman, was asked whether hiring Ms. Whitman had been “hasty and premature.” He replied that the board had revisited the results of the search done before hiring Mr. Apotheker, but wanted “to reach inside” H.P. Despite her brief tenure solely as a board member, he said Ms. Whitman was viewed as an insider.

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Meg Whitman called Hewlett-Packard “an American icon.”Credit...Pool photo by Jose Luis Villegas

In one change from Mr. Apotheker’s plans, Ms. Whitman told investors in the conference call that H.P. would reach a decision about the fate of its PC business by the end of the year, rather than next year.

She said in the interview that H.P. would remain committed to the sale of computer hardware, drawing a distinction between herself and Mr. Apotheker. “He was a software executive who thought there was a faster-growing, higher-margin business in software,” she said, but “it will not transform the company.”

H.P. did not reveal any details about Mr. Apotheker’s exit package, though it is expected to in the coming days. After analyzing Mr. Apotheker’s contract, James F. Reda & Associates, a compensation consulting firm, estimated he could get as much as $38 million in total compensation, including severance, salary and other items, from his 11 months working at H.P.

A hint of trouble for Mr. Apotheker surfaced two weeks ago, when Dominique Senequier, an H.P. director and chief executive of a private equity firm, notified the company that she planned to leave the board early next year, a fact disclosed in a company filing with securities regulators.

The decision by Ms. Senequier, who was known to be close to Mr. Apotheker, was prompted by a concern about Mr. Apotheker’s fate at the company, according to the person familiar with the board’s discussions.

Dissatisfaction with Mr. Apotheker had been building since he was named to lead the company less than a year ago, but the concerns boiled over beginning on Aug. 18, said Mr. Lane.

That was when H.P. hastily announced that it was exploring a sale or spinoff of its PC business into a separate company, after portions of the news became public earlier in the day, and disappointing quarterly earnings.

The changes caught many H.P. executives off-guard; Todd Bradley, the executive in charge of its PC business, received less than 24 hours’ notice, according to a person close to Mr. Bradley.

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Dominique Senequier said she would leave the board.Credit...Mal Langsdon/Reuters

The uncertainty about the future of the PC business also created uneasiness among the company’s big corporate customers, causing concern among H.P.’s board that it could contribute to weakness in its PC sales.

Executives at H.P. were also upset about the way Mr. Apotheker announced plans to discontinue smartphones and tablet computers that use an operating system, WebOS, which H.P. acquired last year through its $1.2 billion purchase of Palm Inc.

H.P. said it was shelving the products after they failed to sell well. But many executives felt that H.P.’s announcement left in doubt the future of WebOS, which many supporters inside the company say still had enormous value — for instance, as software that could be licensed to other device manufacturers, said the person knowledgeable about the board’s discussions.

H.P. was later forced to clarify that it wanted to keep the software alive by partnering with other hardware companies.

“It was botched in a big, big way,” M. Eric Johnson, a professor at Dartmouth College’s Tuck School of Business, said of H.P.’s announcement of its strategy change last month. “It came out in dribs and drabs in a very confusing set of announcements.”

The atmosphere in the executive ranks at H.P. beneath Mr. Apotheker became increasingly tense over the past several weeks. “They were demoralized and confused,” said one former H.P. executive who stays in contact with colleagues still at the company. “They felt there was no process matching the vision, no structure for execution.”

H.P.’s board was becoming more unsettled by Mr. Apotheker’s communications with investors, including bullish statements about H.P.’s prospects that turned out to be embarrassing in hindsight. At an investor conference in the spring put on by Sanford C. Bernstein, the investment firm’s analyst Toni Sacconaghi asked Mr. Apotheker how confident, on a scale of one to 10, he was that H.P. would earn $7 a share during fiscal 2014.

Mr. Apotheker’s described his confidence level as an 11, according to Mr. Sacconaghi.

But when H.P. announced its strategy shift in mid-August, the company said weakness in its business would force it to withdraw its 2014 financial forecast, without providing a new estimate of how much it expected to earn that year.

Quentin Hardy and Eric Dash contributed reporting.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: H.P. Board Selects Whitman as New Chief. Order Reprints | Today’s Paper | Subscribe

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