SAN FRANCISCO (Reuters) - Hewlett-Packard Co. (NYSE:HPQ - news) on Wednesday ousted Chairman and Chief Executive Carly Fiorina, the architect of a controversial merger with Compaq Computer that never produced the results she promised.
Fiorina, 50, one of the most powerful women in business, said in a statement, "While I regret the board and I have differences about how to execute HP's strategy, I respect their decision. HP is a great company and I wish all the people of HP much success in the future."
Analysts said her departure would be good for the computer and printer maker, and HP shares jumped 10 percent in early trading.
"I would say there will be a boost to employee morale because internally people had become frustrated, certainly within the printing division," said Shannon Cross, a Wall Street analyst with Cross Research who tracks the printing industry.
Peter Sorrentino, chief investment officer of Bartlett & Co. in Cincinnati, also expressed relief at the management change.
"This was a move that we had long hoped they would take. We thought the stock, just from the imaging business, is worth $24 a share, and you were being impaired as a shareholder because of the other businesses," he said.
Shares of HP, a component of the Dow Jones industrial average, rose $2.06 to $22.20 in early trading on the New York Stock Exchange (news - web sites).
Robert Wayman, HP's chief financial officer, was named CEO on an interim basis and appointed to the board of directors of HP. Wayman rose through the ranks at HP after joining the company in 1969.
HP said a search for a new CEO was underway.
Patricia Dunn, vice chairman of Barclays Global Investors and a member of HP's board since 1998, was named non-executive chairman of the board.
MERGER HEADACHES
Fiorina, who joined HP as CEO in 1999, became a lightning rod for criticism from investors and some in the Silicon Valley establishment for pushing through the 2002 merger with rival PC maker Compaq.
Critics, including family members of HP founders William Hewlett and David Packard, argued that the merger diluted the value of HP's crown jewel, its profitable printer and imaging business.
SG Cowen analyst Richard Chu said Fiorina's ouster would help HP shares. "The fact that everything is back on the drawing board, with respect to (spinning off) the printer business, makes the stock more attractive," he said.
Sorrentino said, "HP has never had a cost-effective model in terms of the PC business, they've frittered away their lead in imaging, and their move to services never really panned out, even with the addition of Compaq."
HP's stock has languished since the Compaq deal, and the company has also suffered from failed execution, which meant that quarterly results were inconsistent, leading to several sharp sell-offs in the shares in recent years. (Additional reporting by Franklin Paul and Martha Graybow in New York)
