HP’s 2013 outlook falls flat, shares near nine-year low

SAN FRANCISCO, Wed Oct 3, 2012 – Hewlett-Packard offered a 2013 earnings outlook on Thursday that underscored slow progress on CEO Meg Whitman’s turnaround plan and decelerating technology spending worldwide, sending its shares to a nine-year low.

Shares in the largest U.S. technology company by revenue plummeted as much as 7 percent after it forecast earnings, excluding certain items, of between $3.40 to $3.60 a share in fiscal 2013.

Whitman on Wednesday blamed unprecedented executive turnover in past years for dragging out the turnaround of the sprawling Silicon Valley computing giant.

Whitman, who became HP’s third CEO in as many years after taking the helm from an abruptly dismissed Leo Apotheker, is trying to revitalize the former industry icon via layoffs, cost cuts, and expansion into areas with longer-term potential such as providing enterprise computing services.

Apotheker’s 11-month tenure was marked by an acceleration of departures from various divisions, such as networking chief Marius Haas, as he brought in former coworkers from SAP AG.

“My belief is that the single biggest challenge facing Hewlett-Packard has been changes in CEOs and executive leadership, which has caused multiple inconsistent strategic choices and frankly some significant executional miscues,” Whitman told investors at an annual conference in San Francisco.

Hedge fund manager charged with insider trading

NEW YORK – A California-based hedge fund manager surrendered to FBI agents on insider-trading charges on Friday, the latest in a series of cases brought by the U.S. government in recent years against money managers and traders.

An FBI spokesman said an indictment would be unsealed later on Friday in federal court in New York outlining the charges against Doug Whitman, the founder of Whitman Capital in Menlo Park, Calif. The hedge fund’s website describes it as a private partnership focused on the technology industry.

Whitman denies that he traded on the basis of unlawfully obtained inside information, his lawyer said in a statement. The lawyer, David Anderson of Sidley Austin LLP, said Whitman had cooperated with the government’s investigation.

“Mr. Whitman did not pay any insiders or provide any personal benefit to any insiders for inside information,” the statement said.

Anderson said the charges were based on information provided to investigators by two traders, Roomy Khan and Karl Motey, who have pleaded guilty to insider trading and conspiracy charges.

“Their claims are false and will be proved false.”

A spokeswoman for the office of the Manhattan U.S. Attorney declined comment because the indictment was not yet public.

Dozens of hedge fund managers, traders, consultants, lawyers and executives have been charged since 2009 in a sweep by federal authorities to stop money managers from gaining an illegal edge in the market with inside information.

HP may oust CEO Apotheker, hire eBay veteran Whitman: source

PALO ALTO, Calif. ― Hewlett-Packard Co’s board convened on Wednesday to consider ousting CEO Leo Apotheker after less than a year on the job and replacing him temporarily with former eBay CEO Meg Whitman, a source familiar with the matter said.

HP’s board of directors — facing shareholder lawsuits and intensifying criticism from investors — is thrashing out a host of issues, including whether to name Whitman as the interim CEO, the source told Reuters.

The storied Silicon Valley giant is fighting to restore its crumbling credibility. During his 11-month tenure, Apotheker slashed sales forecasts repeatedly, backtracked on promises to integrate Palm’s webOS software into devices, and struggled to halt a 50 percent plunge in the share price.

No decisions have yet been made about leadership, the source said on condition of anonymity because of the sensitivity of the issue.

Wall Street roared its approval, sending HP shares up 6.6 percent to close at $23.96, a gain of $3 billion in the company’s market value.

If Apotheker is let go, he would be the third CEO in a row to be ousted by the board of the largest U.S. technology company by sales.

Analysts say the odds may have been stacked against Apotheker from the beginning. Venture capitalist Ray Lane, who this year assumed chairmanship of an often-lambasted but powerful board, has argued that previous management underinvested in areas including software and services.

“He was doomed from the beginning,” said Ticonderoga Securities analyst Brian White. “The die was cast for whoever stepped into that position.”

Investors seemed to approve of Whitman, a billionaire who joined HP’s board this year on an interim basis after a failed bid to become California’s governor.

Apotheker, former CEO of German business software maker SAP AG, was a surprise choice to replace the popular Mark Hurd, himself ousted last year after a scandal involving expense reports and a female contractor.

Before Hurd came Carly Fiorina — like Whitman, a candidate for California political office — whom investors blamed for betting on a sunset PC industry by buying Compaq. She was eventually fired by the board.Now, HP is grappling with withering criticism from Wall Street — and a raft of shareholder lawsuits — over recent strategic decisions and the haphazard way in which they have been communicated.

In August, it confounded investors by killing off a much-touted line of mobile devices including the TouchPad and declaring it may spin off its massive PC division. Apotheker also spearheaded a deal to buy British software maker Autonomy that many considered too costly.

The potential loss of HP’s main public face raises questions about those pivotal strategic shifts, and has even triggered speculation the board might do an about-face on some of them.

Especially rankling to investors had been a decision to fork over close to $12 billion for Autonomy, without clarifying how the niche maker of cloud-computing software would fit into or help drive a sprawling empire that spans computers, printers, software and enterprise IT solutions.

“If (HP) fires Apotheker, cancels Autonomy deal, and keeps PC division, it’ll be great for the stock — and every director should be arrested,” outspoken hedge fund manager Eric Jackson said on Twitter in reaction to the news.