Hewlett-Packard (HP) directors were concerned plummeting shares would make the company vulnerable to a bid from Oracle Corp when they replaced Leo Apotheker with Meg Whitman, two people close to the board said.
While Oracle has considered informally whether to approach HP, it’s unlikely to make a bid any time soon, three people close to the software company said. After speaking with several financial advisors, HP has hired Goldman Sachs Group Inc to help it prepare for any possible moves by activist investors, one person said.
Whitman took over as HP’s chief executive officer (CEO) on September 22, succeeding Apotheker, who presided over a 47 per cent drop in the company’s stock and sliced sales forecasts three times in less than a year. As the board deliberated changing the CEO, one consideration was whether share-price weakness would invite an unwelcome overture, the people close to the board said.
“We were very explicit about why we named a new CEO,” said Mylene Mangalindan, a spokeswoman for Palo Alto, California-based HP. “The board believes the job of the HP CEO now requires additional attributes to successfully execute on the company’s strategy.”
Michael Duvally, a spokesman for New York-based Goldman Sachs, and Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, declined to comment.
HP STOCK PLUNGE
Share declines accelerated after the August 18 announcement that HP would consider spinning off its $41-billion personal computer division, and would buy Cambridge, England-based software maker Autonomy Corp for $10.3 billion, a price investors regarded as too high. Apotheker was also unable to get top executives to work together, executive chairman Ray Lane told investors on September 22.
Oracle is not interested in HP’s PC, printer or information-technology services divisions, nor does it want to sell server computers running Windows, the software made by Oracle rival Microsoft Corp, one person said. The company may also be inhibited by terms of an agreement, announced in September, over the appointment of Mark Hurd as a co-president of Oracle, other people said.
That’s when the companies resolved the lawsuit by HP, which sued on September 7 to block former HP CEO Hurd from moving to Oracle. The agreement included stipulations that Hurd protect HP’s confidential information while fulfilling his obligations to Oracle, the companies said at the time. It also ties Oracle’s hands from attempting to acquire HP until some time early next year, people familiar with the agreement said.
