Shares of Hewlett-Packard (HPQ) have spiked, rising $1.73, or almost 8%, at $24.20, after trading in the red most of the session, as Bloomberg’s Aaron Ricadela and Carol Hymowitz report that HP’s board of directors will meet to consider dismissing CEO Leo Apotheker, citing two anonymous sources.
The board is considering former eBay (EBAY) CEO Meg Whitman, they write. HP shares are down 47% since Apotheker took over late last year, the authors note.
AllThingsD’s Kara Swisher this afternoon has her own article describing the Board considering Whitman, citing her own anonymous sources.
“A significant contingent on the board is keen to remove Apotheker after a what some directors consider is a series of management mishaps,” Kara relates.
A couple responses are trickling in. Brian White with Ticonderoga Securities writes that it may be a good thing for HP, if true, and that Apotheker is probably a fall guy. “Given the company’s history of leaks, we would not be surprised if there is some truth to this story,” writes White. “We have always thought that L�o was placed in the role on a short-term basis to take the fall for the company’s under investment under the previous CEO.”
A new CEO would have to “rebuild” trust, he thinks.
“Quite a bit of damage has already been done. Keep in mind, stock is already down 43% this year and investors are really irked by the company’s recently announced, rich acquisition of Autonomy.”
Tom Villalta, who is the portfolio manager for the Jones-Villalta Opportunity Fund (JVOFX), which recently added HP to its holdings, shared in an email that he thinks the euphoria in the stock price over this rumor is silly:
The market�s move with regard to HP is a bit paradoxical today. While I think many are focusing too much on management turnover and a change in strategy and less on the underlying fundamentals of the majority of HP�s businesses, that the market would applaud more management turnover is nonsensical. In truth, if the board determines that HP should be moving to more high margin businesses such as Software � which I would note, is a good strategy � and away from lower margin businesses such as the Personal System Group � then I think HP would be hard-pressed to do better than Apotheker. [...] The last thing HP needs right now is more management turnover. We like HP a lot. It�s our newest holding that we purchased on September 9th. HP has a lot of good businesses and generates a tremendous amount of cash flow in relation to its share price. While we would not applaud management change, it would not dim our view of HP�s underlying value.”
Dave Novosel, credit analyst with Gimme Credit, this afternoon writes that “While a change at the top may provide a near-term boost, we think problems go beyond the CEO” — specifically, the problems�with HP’s services business and PC business, larger issues that someone will need to address.
Bob Djurdjevic, the former IBM (IBM) employee who runs Annex Research, and is often a press source for insights on large-cap tech, sent around a rather mischievous email this afternoon, in which he wrote, �regarding the jump in share price, “Wow. Just think how much they would jump on a rumor that the entire schizophrenic HP board is about to fire itself! Who knows, maybe that could be a turning point for the economy, too?”
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