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Fiorina steps down -- HP seeks change

Hewlett-Packard today announced the departure of CEO Carly Fiorina following reports that HP's executive board was unhappy with her leadership.

Carly Fiorina, one of the nation's best-known business leaders, today surrendered her post as Hewlett-Packard Co.'s CEO.

HP's board decided to replace Fiorina, following a rollercoaster ride as CEO that included the controversial acquisition of Compaq Computer Corp., a massive reorganization of the company's business units -- and a significant rise in revenues since Fiorina's arrival.

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In recent weeks, Fiorina has publicly denied that her relationship with HP's executive board was strained, following reports that the board was seeking to lessen her day-to-day involvement in key strategy decisions -- and was frustrated by her refusal to name a chief operating officer (COO) to assist her.

Yesterday, in a statement released by HP, Fiorina alluded to the divide between her and the company's directors.

"While I regret the board and I have differences about how to execute HP's strategy, I respect their decision," Fiorina said. "HP is a great company and I wish all the people of HP much success in the future.

For now, HP's chief financial officer, Robert P. Wayman, will serve as interim CEO. Patricia C. Dunn, an HP director since 1998, has been named non-executive chairman of the board.

In a prepared statement, Dunn praised Fiorina's leadership. "Carly Fiorina came to HP to revitalize and reinvigorate the company. She had a strategic vision and put in place a plan that has given HP the capabilities to compete and win. We thank Carly for her significant leadership over the past six years as we look forward to accelerating execution of the company's strategy," Dunn said.

In recent moths, IT executives throughout the industry had been speculating on whether Fiorina would survive as HP examined its shrinking PC market share and IBM continued to trounce HP's corporate-computing unit.

Rob Enderle, an analyst with the Enderle Group in San Jose, Calif., said the executive board felt a strong COO should be brought in to work alongside Fiorina -- and she continued to resist that idea.

"It was very clear that the board and Carly were at odds over the operation of the company," he said. "I was very surprised that they didn't come to an agreement. It was just very clear that she didn't have her arms around the operations."

Bob Schwartz, the CIO and chief technology officer at Panasonic Corp. North America in Secaucus, N.J., was among the executives who were not surprised.

"It's fair to say that the industries that we are in are certainly facing challenges that we have never seen before," Schwartz said. "HP is certainly struggling with challenges."

Cathy Hotka, principal of Cathy Hotka & Associates, a Washington-based retail IT consultancy, said she thought Fiorina wasn't given a chance to take HP as far as she might have.

"I kept hearing from people about the merger, that it has not gone smoothly, that the cultures had not meshed," Hotka said. "We live in a culture of instant gratification. We're not willing to wait for anything. Sometimes it takes a while for things to happen. People just wanted things to turn around immediately."

Following the news of Fiorina's ouster, HP shares jumped to $22.47 -- up $2.23 from the close of business Tuesday. The company's annual shareowner meeting will be held in Chicago on March 16, 2005. In its press release, HP said a search for a new CEO is under way.

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