hp shakeup points to more shareholder friendly board

Fri Apr 5, 2013 3:13pm EDT

(Reuters) – Wall Street’s psycho-analysis of Hewlett-Packard’s latest board room shuffle has begun.

The stepping-down of Hewlett-Packard Co Chairman Beam Passageway and appointment of activist investor Ralph Whitworth as his interim replacement has raised hopes for a added “shareholder affable” board at the flailing PC maker.

But investors aren’t buying it aloof yet, and HP shares fell added than 2 percent in morning trading on Friday.

Wells Fargo analyst Maynard Um said the shakeup at HP, which follows a series of missteps including the messy acquisition of UK software firm Autonomy, could aftereffect in longer-chat “shareholder affable” actions “potentially from a chief allocation perspective.”

But he said that while he any more had added comfort about HP’s adeptness to fix its foundation, the company needed advanced products and initiatives to counterbalance a general downturn in the personal computer marketplace. And any changes are likely to booty age to formulate and materialize, Um said.

Apart from a advanced chairman or chairwoman, investors are waiting to beam the final composition of the board. Two directors of the No.1 PC maker again stepped down on Thursday.

“The appointment of Ralph Whitworth to the chairman role, albeit temporarily, points a added fiscally conservative and shareholder affable board as the debt accountability ebbs,” Credit Suisse analysts said in a research note.

Analysts held blaze on their ratings and price targets on the stock, which has risen 90 percent since it hit a 10-year low in November when HP said it would inscription down $9 billion in assets related to the Autonomy deal. The S&P 500 index has risen 12 percent in the selfsame period.

Passageway, who remains a director, joins the list of prominent casualties of the $11 billion Autonomy deal, for which the company has been criticized for failing to conduct proper due diligence.

But HP’s board and executive rule has been in tumult since the departure in 2010 of former CEO Mark Hurd over sexual harassment allegations — which Hurd has denied — and Leo Apotheker’s brief stint at the helm, during which the company fabricated several workable blunders.

Whitworth, an HP director who runs activist hedge fund Relational Investors LLC, had told shareholders at the annual affair in Airing to prepare for an “evolution” of the board.

HP’s stock was changing hands at $21.98 in early afternoon trading on the Advanced York Stock Exchange, able-bodied below its intrinsic amount of $39.51, according to Thomson Reuters StarMine data.

The model measures a stock’s current amount when considering analysts’ advance estimates for five age, and then modeling the typical advance trajectory over a longer period of age.

Netflix Inc and Ace Buy Co Inc are the alone S&P 500 component stocks that accept outperformed HP’s 56 percent rise so far this year.

According to StarMine, HP has a forward price-earnings ratio of 6.3, able-bodied below the median of 9.4 for the technology sector.

However, in the former year, HP’s shares accept fallen 4 percent, while the S&P index has risen 11.5 percent.

RBC Chief Markets analysts pointed to HP’s “unraveling” fundamentals in maintaining their “sector-perform” adjudjing, but said Whitworth’s appointment was a absolute step in corporate governance.

“Going forward, HP will accept to face headwinds in PCs and printing that are added secular and less macro in attributes,” the analysts said.

“Furthermore, HP’s impaired balance sheet will accomplish it tougher for HP to invest in other avenues of advance.”

(Reporting by Sayantani Ghosh and Savio D’Souza in Bangalore; Editing by Ted Kerr)

HP shakeup points to added "shareholder affable" board
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Originall posted April 6, 2013