HP Hewlett Packard's Corporate Governance

HP: Hewlett Packard's Resurgence

corporate governance news

This page has been validated HTML 4.01 Transitional by W3C.org

Hewlett Packard (HP) and Chair, CEO Mark Hurd Weather the storm

HP Overtakes Dell as World's Number One PC Maker

» Resurgence
» Dell's Governance Problems
» California Backs Away From Felony Charges
» HP's New Board Appointments Aimed at Improving Governance Oversight

Resurgence

February 8, 2007. Hewlett Packard, and its Chair and CEO Mark Hurd, appear to have weathered their 2006 corporate governance woes fairly well. There are even signs of a resurgence.

In the third quarter of 2006, HP surpassed Dell Computers in worldwide personal computer shipments placing it as the world's number one personal computer maker. Dell had been at the top of the PC market since 2003.

HP's revenue for the four fiscal quarters ending October 31, 2006 totalled $91.7 billion. Hewlett-Packard's personal-computer shipments jumped by 15% to 9.65 million computers in the third quarter of 2006, while Dell's rose 3.6% to 9.54 million, giving both companies a 17.2% market share (and a slight edge for HP).

HP expanded its lead over Dell in the fourth quarter of 2006. A January 17, 2007 news release from HP reads: "According to the IDC Worldwide Quarterly PC Tracker for the fourth calendar quarter of 2006, HP extended its worldwide PC shipment unit share lead to 2.2 percentage points over its nearest competitor for a market share of 18.1 percent. HP worldwide PC shipments grew at a rate of 23.8 percent year-over-year, almost three times faster than the growth rate for the overall worldwide PC market for the period. HP's U.S. market share also grew significantly faster than the market in the fourth quarter to increase share by 3.4 percentage points to 24 percent, from 20.6 percent for the same period in 2005."

HP's share price that had traded below $30 in June 2006, has been trading above $42 dollars since January 2007.

Dell's Governance Problems

On the governance front, while HP's problems seemed to be easing, Michael Dell, founder and chair of Dell, took back the job of CEO from Kevin Rollins, a post he relinquished in 2004 - having served in that position since 1984 when he founded the company in a dorm room. Dell has been struggling to make a turn around in 2006, during which time HP making a resurgence as a leader in the personal computer field. In pursuit of high profit margins, Dell had neglected customer service, a major reason for its initial rise to the number one PC maker spot.

California Backs Away From Felony Charges

The State of California appears to be backing away from Felony charges against former Chair Patricia Dunn and Kevin T. Hunsaker, a former senior HP employee see article below. The insider trading suit against Mark Hurd also appears to be going nowhere.

HP's New Board Appointments Aimed at Improving Governance Oversight

On February 6, 2007, HP announced the appointment of Michael J. Holston, 44, as executive vice president and general counsel effective February 22, 2007. He will be responsible for the company's legal affairs, as well as compliance, government affairs, privacy and ethics. Houston will report to Mark Hurd, chair and chief executive officer, and will be part of HP's Executive Council leadership team. As a partner at Morgan Lewis, Houston had been HP's external counsel for over 10 years on a variety of litigation and regulatory matters. In 2006, HP appointed Holston to conduct an investigation of the spying scandal at HP and in September, Holston revealed the results of his investigations, naming the HP executives involved in finding the source of boardroom leaks and disclosing plans at HP to use false information to lure reporters into identifying the leak. Holston said Mark Hurd, chairman and CEO of HP, approved of the plan.

Last month, HP appointed G. Kennedy Thompson, the CEO of Wachovia, as an independent director with the responsibility for reviewing and reporting on HP's compliance with legal and ethical requirements related to investigations.