Shares of Hewlett Packard Enterprise were down 6% in pre-market trading on Wednesday after Chief Executive Officer Meg Whitman’s decision to step down from the role took investors by surprise.
Whitman, one the most high-profile executives in the United States, said on Tuesday she would quit as CEO in February and hand over the reins to company veteran Antonio Neri.
After reports surfaced that she was being considered for the top job at Uber, Whitman reinforced her dedication to the role in July by saying that she was fully committed to HPE (HPE) and planned to remain CEO.
“We have a lot of work still to do at HPE and I am not going anywhere. Uber’s CEO will not be Meg Whitman,” she had tweeted.
Related: HPE CEO Meg Whitman Reveals Why She’s Stepping Down
But her move caught analysts off guard. HPE is in the middle of a restructuring to cut costs, invest in research and focus on high-margin businesses. Its mainstay server business has been struggling as customers increasingly buy non-branded, assembled servers that are much cheaper.
“We are surprised by the timing of the CEO transition given commentary at the recent analyst day that seemed to imply a CEO transition was not in the offing,” BMO Capital Markets analyst Tim Long said in a research note.
Long, however, added that Neri’s experience running the company’s Enterprise Group made him a strong fit for the CEO role.
The restructuring, which was announced last month and called HPE Next, was supposed to be led by Neri—a computer engineer who has spent more than two decades with the company and is HPE’s current president.
Related: HPE CEO Meg Whitman Is Stepping Down. Here’s What She Says About Her Next Move
Neri’s appointment is not a surprise given his increased visibility in recent months, Morgan Stanley analyst Katy Huberty wrote in a research note.
Neri began his career in HP as a customer service engineer in the EMEA call center. He previously led HP’s technology services business and then its server and networking businesses, before taking over the whole Enterprise Group in 2015.
Barclays analyst Mark Moskowitz and Morgan Stanley’s Huberty expect Neri to shift gears and aggressively develop technology in-house, rather than focus on mergers.
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Since its split from Hewlett-Packard in late 2015, HPE has spent billions buying companies providing cloud software and data storage to better position itself to serve customers who are moving their operations to the cloud.
HPE’s shares have risen 5% this year, compared with a 16% gain in the S&P 500 index.
