Annex Bulletin 2011-05                            January 20, 2011

A partially OPEN edition

Recent...

IBM: Another Phoenix of the IT Industry , Analysis of IBM's 4Q10 result

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INDUSTRY TRENDS

 

Updated 1/20/11, 8:30PM HST

Analysis of Hewlett Packard's Board Shake-up

New Broom Sweeps Clean

Apotheker Fills Our First Prescription in Board Shake-up, Four HP Board Members Leave, Five New Ones Appointed

HAIKU, Maui, Jan 20, 2011 - "New broom sweeps clean," they say.  HP CEO Leo Apotheker partially filled our first prescription, shaking up the schizophrenic Hewlett-Packard board.  Four of HP directors were shown the door today, while five new ones were ushered into the boardroom.   So the balance of power has shifted practically overnight from a Mark Hurd- to a Leo Apotheker-board.

Back in August, when the HP executive crisis news first broke, we said that Maybe Entire HP Board Should Resign?  Here's why...

Perhaps it is time for all HP Board members to acknowledge their lapses in judgment and resign collectively.   For, they have failed to protect the HP shareholders' best interests.  Which is their fiduciary duty one and the only raison d'etre (reason for being). 

(An excerpt from HP's Hurd: Do As I Say Not As I Do - HP's "Humpty-Dumpty" who could "Walk on Water" could not walk his talk, Aug 7, 2010)

While Apotheker didn't reshuffle the entire board at once, he did do a fair bit of house cleaning.  Some of Mark Hurd's staunchest supporters on the board, including John Joyce, former IBM CFO from Lou Gerstner's era at the helm of Big Blue, are now gone. Two of the four departing directors -- Joyce and Joel Hyatt -- were named to the HP board during Hurdís term as CEO.  The other two ousted directors were Robert Ryan and Lucille Salhany.

You can read more about the HP board games in this Dow Jones MarketWatch story (HP Board Shake-up, Jan 21).

Our bottom line?  This is good news for HP shareholders and employees.  An old Eastern European proverb says that "fish always stinks from the head."  So do the corporate boards.  And HP's has been dysfunctional long before Apotheker ever showed up on the scene.  So starting to clean house in the executive suite - in contrast to Mark Hurd who laid off tens of thousands of employees, like Gerstner in IBM of the early 1990s - should help the new HP CEO win more badly needed employee support.

Guess we're not the only ones who feel that way.  HP stock surged in the final minutes of trading.  So Apotheker seems to be gaining support among the investors, too.

Happy bargain hunting

Bob Djurdjevic

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Volume XXVI, Annex Bulletin 2011-05
January 20, 2011

Bob Djurdjevic, Editor
e-mail: annex@djurdjevic.com

(c) Copyright 2011 by Annex Research, Inc. All rights reserved.
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