HP's Blackmore And Milton Out

Hewlett-Packard has given its top enterprise server and storage executives, Peter Blackmore and Jim Milton, their walking papers in the wake of a $208 million third-quarter operating loss for the division.

An HP spokesperson confirmed the management shakeup. Both Blackmore and Milton were senior Compaq executives who joined HP after it acquired Compaq two years ago.

Mike Winkler, who will retain his current job as executive vice president and chief marketing officer, replaces Blackmore. Jack Novia, who was senior vice president and general manager of the HP Technology Solutions Group, replaces Milton.

HP disclosed the changes internally after it announced on Thursday that it would miss its fiscal third- and fourth-quarter estimates because of problems in its enterprise storage and server unit. The news sent HP shares tumbling 16 percent to $16.28.

Blackmore, who reported to HP Chairman and CEO Carly Fiorina, was executive vice president of HP's Customer Solutions Group, which is responsible for account management of the company's enterprise and small- and midsize-business customers. Milton, who reported to Blackmore, was managing director for the Americas and senior vice president of the Enterprise Systems Group.HP attributed the disappointing results in part to a migration to a new SAP order-processing and supply-chain system. Fiorina said in a prepared statement that the problems have resulted in "immediate management changes," along with margin-improvement plans that she expects will return the unit to profitability in the fiscal fourth quarter. Chuck Kokoska, president of The Computer Specialists (TCS), a Whitesboro, New York-based HP Gold partner, said he has seen a number of problems with shipping delays for a wide range of products, including servers and storage.

"I don't know if this will solve the problem," Kokoska said. "There seems to be a major gap between the direction from upper management and the implementation at middle management. The problem pervades the entire organization. There has to be a fundamental change to move back toward the Compaq spirit of 'can-do' vs. the HP spirit of 'we'll think about it.' "

Fiorina outlined the executive changes in a memo to employees. Below is the text of the memo:

I am announcing the following management changes effective immediately.

Mike Winkler will replace Peter Blackmore as executive vice president of the Customer Solutions Group (CSG), with responsibility for all direct sales to the company's enterprise, small- and medium-size business, and public-sector customers worldwide. Mike will also retain his current responsibilities.Jack Novia will replace Jim Milton as CSG senior vice president and managing director for the Americas region. Previously, Jack was senior vice president and general manager of the HP Technology Solutions Group and spent two years as senior vice president and general manager of HP Services America.

Bernard Meric will replace Kasper Rorsted as CSG senior vice president and managing director for the Europe, Middle East and Africa (EMEA) region. Bernard has served as senior vice president of HP's Imaging and Printing Group in EMEA for the last several years.

We thank Peter, Jim and Kasper for their years of service and dedication.

I look forward to working with our new CSG leaders.

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