Saturday, September 09, 2006

HP Divided

2002 - Walter Hewlett, after HP's $19 billion acquisition of Compaq
2005 Feb - Ms. Fiorina
Now 2006, it could be their Chairman, Patricia Dunn's turn to depart from HP and its Board.

Yes, with $77 billion in total assets (of which $43 billion are current), one of the biggest Silicon Valley firms, HP, has been undergoing unusual upheavals in the recent years. The board has fluctuated between nine and 11 directors in the past 18 months, with multiple comings and goings.

The 2006 HP scandal: Ms. Dunn had helped prod H-P's board to examine Ms. Fiorina's performance and how well H-P had fared since its acquisition of Compaq in 2002.

Ms. Dunn authorized the probe into media leaks. After private investigators obtained phone records that showed director George Keyworth had spoken with a reporter, Ms. Dunn and H-P's general counsel, Ann Baskins, concluded the leak was a violation of the company's standards of business conduct.

And it gets worse. Now, California Attorney General Bill Lockyer yesterday said his office will probably file criminal charges related to the company's use of private investigators to obtain phone records of board members who might have been leaking to the news media. The investigators used "pretexting" -- calling a phone company to get a customer's information under the pretext of representing that customer -- a scam that has been a growing problem for phone companies and an even worse one for consumers, The Wall Street Journal notes.

A divided Hewlett-Packard Co. board is scheduled to confer by phone Sunday to discuss the future of Chairman Patricia Dunn and other fallout from an investigation of press leaks which authorities say may have violated California law. However, Ms. Dunn says she has no plans to resign. However, she said she would step down as both chairman and an H-P board member if fellow directors request it. "I serve entirely at the pleasure of the board," Ms. Dunn said. "If they determine it no longer is in the interest of shareholders" to remain chairman or a director, "I will do so."

And although this nixonian scandal is the talk of the Silicon Valley, surprisingly the street has not "yet" reacted much to it. HP shares hardly changed this week. That concerns me, because I'm beginning to wonder about the value that Ms. Dunn had been adding to the board then!



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