In an earlier post, I warned that Hewlett Packard(HPQ) should be sold it as it had only gone up in the face of increasingly bad news. More than a week later, the stock has finally begun to descend(down $1.91 to $34.87 on 9/21), but with the news continuing to get worse and clear questions unaddressed, the stock continues to be too dangerous to own.
After much hesitation, it was finally announced last week that Patricia Dunn was stepping down as Chairwoman, but she continues to remain on the board. This depsite new allegations of additional questionable investigative techniques including an attempt to install spyware on a reporter’s computer.
More recently, the Washington Post reported that CEO Mark Hurd was involved in the investigation. Hurd has been credited with turning the company around, and his alleged involvement casts doubt on HP’s continued turnaround. California Attorney General Bill Lockyer had complained early Thursday that HP had stopped cooperating in his investigation, but his office later reported that cooperation had resumed. Hurd has also agreed to testify before a Congressional committe next week on the matter.
Reuters reports that Lawrence Bossidy has called on the entire HP board to resign, and I second that. As long as there are no changes, and those who executed such incredibly poor judgement are still at the helm, there is too much risk here to justify owning this stock.
Disclosure: I own no HPQ
Update: Dunn resigned effective immedaitely Friday afternoon(9/22/06). This is certainly a positive sign, but it’s not enough. The board that allowed this to go on, and allowed her to stay on for weeks after these disclosures, needs to follow her.
Kevin Kelleher agrees and his eloquent article is a must-read. Meanwhile, the chorus of Wall Street analysts continues to be positive on the company. They still seem content that this scandal has run its course. It’s unclear why the believe this, and oddly, they seem unconcerned that those whose poor judgement allowed this to go on are still in decision making roles at the company. So much for the renewed focus on business ethics.