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Analyst discusses Hewlett-Packard board shake-up

NEW YORK (AP) -- A Jefferies analyst says Hewlett-Packard Co.'s board needed some change, but expects the personal computer maker won't roll out any new broad initiatives until a permanent new chairman is announced.

Late Thursday HP said that Ray Lane is stepping down as chairman and board members John Hammergren and G. Kennedy Thompson are leaving the board. The shake-up was spurred by disgruntled stockholders stung by HP's performance.

Lane will remain on HP's board. He will be replaced as chairman on an interim basis by Ralph Whitworth, a shareholder activist who has been on the board for less than 18 months. Hammergren and Thompson will depart after HP's board meeting next month. HP intends to name two new directors to replace Hammergren and Kennedy by the end of this year. Until then, HP will have nine directors on its board.

Peter Misek of Jefferies said in a client note that he believes it could take three to four months before a permanent successor to Lane as chairman is named and "that potential recruits would be unhappy if the current board made any significant decisions before their arrival."

The analyst also said that Whitworth was very supportive of CEO Meg Whitman in an open letter. Misek says that suggests that it is unlikely that there will be any near-term spinoff or leveraged buyout of HP.

Misek maintained an "Underperform" rating and $18.50 price target.

HP declined to comment on the analysis by Misek.

Shares of HP fell 28 cents to $22.02 in morning trading on Friday. The stock is up 56.5 percent for the year-to-date.