From the New York Times

Hewlett-Packard's Chief Forced Out, Ending Rocky Tenure
By GARY RIVLIN and MARK GLASSMAN

Published: February 9, 2005

SAN FRANCISCO, Calif., Feb. 9 - Carleton S. Fiorina, perhaps the most powerful woman in corporate America, resigned as the chief executive of the giant computer and printer maker Hewlett-Packard, the company announced today.

The company's board called for Ms. Fiorina's resignation on Tuesday after she and directors disagreed on how to carry out Hewlett's corporate strategy.

The resignation brings to a close a rocky tenure for Ms. Fiorina, who oversaw Hewlett's controversial acquisition of the Compaq Computer in 2002. Her charisma and aggressive, top-down leadership style made her a highly visible personality in the consumer electronics industry and the target of some criticism during her five-year stint with the company. Moreover, the Compaq deal failed to bring Hewlett the profits that Ms. Fiorina had forecast.

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

Robert P. Wayman, Hewlett-Packard's chief financial officer and a 36-year employee of the company, was named chief executive on an interim basis and was appointed to the board. Patricia C. Dunn, a director at Hewlett since 1998, was named non-executive chairman of the board.

"This is not a change related to strategy," Ms. Dunn said in a conference call with industry analysts and investors. "This is a changed based on a desire to accelerate that strategy. We think that requires hands-on execution."

She added: "These things always seem precipitous when they occur. But the board has been deliberating the company's performance, and the C.E.O.'s performance, for quite some time."

Ms. Dunn said that no other changes in management were expected at this time and that the company would continue to operate essentially the same way. "The board is firmly committed to the business strategy that is in place," she said.

The forced resignation would appear to be a remarkable turn in events for Ms. Fiorina. Speaking last month at the World Economic Forum in Davos, Switzerland, Ms. Fiorina characterized her relationship with the board as "excellent," according to The Financial Times. The newspaper said she dismissed as "pure speculation" a report in The Wall Street Journal that suggested that Hewlett's board had doubts about her ability to lead the company.

Wall Street signaled its approval of Ms. Fiorina's resignation today. Hewlett's shares climbed $1.39, or 6.9 percent, to close at $21.53 on the New York Stock Exchange.

Ms. Fiorina, 50, will receive a severance package worth $21.1 million, according to Dow Jones Newswires.

The decision to remove Ms. Fiorina comes after an uncomfortable six months for Hewlett, which is based in Palo Alto, Calif. Last August, the company missed its financial forecasts for the company's third quarter, sending its shares tumbling. The company's fourth-quarter financial results were in line with Wall Street's expectations, but there continued to be pressure on Ms. Fiorina from shareholders to break up the company by spinning off its highly profitable computer printer business.

Ms. Fiorina acknowledged in December, at a meeting with Wall Street analysts, that she had three times discussed a break-up with the Hewlett board but ultimately decided against it.

Wall Street analysts who follow Hewlett, led by Steven Milunovich, a Merrill Lynch technology analyst, have argued that the company would be worth more to shareholders if it spun out its lucrative printing and imaging business, which account for more than three-quarters of Hewlett's revenues. A Merrill Lynch research report released today said that a break-up of the company was increasingly likely.

Still, Hewlett said it would stick to its strategy. "There are no plans to break up the company," a Hewlett spokesman, Michael Moeller, said.

Hewlett plans to report first-quarter financial results on Feb. 16, after the stock market close. Ms. Dunn said the decision to seek Ms. Fiorina's resignation was not connected to the first-quarter results.

Andrew J. Neff, a computer industry analyst at Bear Stearns, said there were always fundamental differences between what Hewlett needed in a chief executive and what Ms. Fiorina could provide.

"H.P. thought that it needed an aggressive salesperson, which is clearly what Carly was, and that wasn't necessarily the issue," he said. He added that some saw Ms. Fiorina's Hewlett-Packard as a "cult of personality."

"Carly came in and made this, one could say, about her," Mr. Neff said.