Next Stage of HP Restructuring Begins as CFO Wayman Retires

In a security analysts' conference this morning, Hewlett-Packard CEO Mark Hurd's message did not exactly follow the holiday spirit. Another round of cost-cutting at what can now be called the world's #1 PC manufacturer will be under way.

During the first stage, which began in July 2005, the company let go of 15,300 employees; thus far, layoffs have not been mentioned for the next round, though it's not unlikely.

But as the company continues to rebuild itself in mid-flight, it will soon be without one of the steadiest and most reliable co-pilots in the history of American industry, let alone computing. Robert Wayman, the chief financial officer of HP for 22 years and an employee of the company for 37 years, will retire at the end of this month, he announced yesterday.

History may credit Wayman, more than Mark Hurd or Carly Fiorina or Lewis Platt, with guiding the direction of Hewlett-Packard in the era after its founders' retirement. While the company's executive leadership have made bold and often questionable moves -- including Platt's idea to spin off its services division to become Agilent in 1999, and Fiorina's still-controversial idea to merge with Compaq in 2001 -- Wayman was the "Yes, sir" (or "yes, ma'am") man who made those moves feasible, workable, possible. His mastery of finance could very well be the reason HP is in existence today, and not merged into some other conglomerate to become forgotten like Osborne or Kaypro or Heath.

His most critical moment in the spotlight came following Fiorina's ouster in 2005, during which he served as HP's interim CEO, steering the company back on course as he led the search for his own successor. Only then was Wayman named a member of the HP board of directors - a position for which, he would discover the following year, he would need all the Teflon at his disposal.

A famous 2003 interview with Wayman for CFO Magazine revealed he was initially skeptical of the whole idea of the Compaq merger. While analysts continue to agree with that impression, the company's financial statistics continue to show it has a steady heartbeat.

Wayman is leaving the company with his trademark sophisticated financial model for fiscal 2008 - which for HP is less than a year away. Today, he repeated his projection for rising revenue for fiscal '07, to total $97 billion. His 2008 model maintains this trend, targeting revenue at $101.9 billion, give or take about a billion or so, with earnings per share at a delightful $2.88. Call it Bob's going-away present.

Of course, whether Wayman's replacement - current senior vice president for finance and 20-year HP veteran Cathie Lesjak - considers this a present or a curse, may take about three fiscal quarters to find out for certain. Lesjak has been treasurer since 2003, when she succeeded another company icon, 17-year veteran Larry Tomlinson. It may have been insiders who have saved HP from the wild and wayward decisions of its outsiders -- from, "Let's not build instruments any more," to, "Let's hire some private investigators" -- and Lesjak clearly represents the bedrock principles of the company.

During an Answerthink Best Practices conference held for rising executives earlier this year, Lesjak contributed to a session on "change management" in the face of rapid globalization. There, she presented a three-pronged strategy that was straight out of the Mark Hurd playbook: capital management strategy, increased operating efficiency, and growth prospects. She may have been Wayman's obvious successor, but that conference may have supplied Hurd with an extra dose of super-glue for Wayman's old seat, should he have had the slightest doubt.

But the task ahead of Lesjak remains huge. HP is far from faltering, but from other analysts' perspective, it's difficult to see the magic that makes that assessment possible. In announcing her upcoming promotion, Hurd's statement yesterday said little more than the requisite pronouncement that he's certain she's the right choice, and that he's appreciative of Wayman's years of service.

CFOs aren't usually the ones that receive the thank-you's, but Wayman's may be the most deserved in the history of American industry. Lesjak, meanwhile, could use a few god-help-you's.