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Archive for Thursday, February 10, 2005

Hewlett-Packard ousts CEO

Stock surges on decision

February 10, 2005

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— Carly Fiorina's nearly six-year reign at Hewlett-Packard Co. ended abruptly Wednesday as board members forced her out, disappointed by her inability to transform a plodding technology giant dominated by printer sales into a more nimble innovator.

HP's stock, which has gone nowhere for two years and is down two-thirds from its peak in 2000, rose almost 7 percent on the news of her ouster.

Board members said they fired the chief executive -- perhaps corporate America's most influential woman -- because Fiorina failed to slash costs and boost revenue as quickly as directors had hoped.

"While I regret the board and I have differences about how to execute HP's strategy, I respect their decision," said Fiorina, 50, who is expected to collect a severance package worth $21.1 million.

Fiorina is best known for orchestrating the 2002 acquisition of Compaq Computer Corp. -- a $24.2 billion stock deal.

The fiercest resistance came from HP director Walter Hewlett, son of an HP co-founder. Hewlett argued that the deal would dilute printing profits while the company absorbed Compaq's low-margin PC business. Employees also soured on the deal, which led to the elimination of thousands of employees per quarter for more than a year.

Many analysts and shareholders remain skeptical that the biggest acquisition in the computer industry was worthwhile. Some business experts expect Fiorina's ouster to precipitate a broad restructuring and management shake-up, possibly undoing many of the changes she spearheaded.

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