HP (Research) jumped 6.9 percent in heavy trading on the New York Stock Exchange Wednesday on the news. But at one point, the stock was up as much as 10.5 percent.
"The stock is up a bit on the fact that nobody liked Carly's leadership all that much," said Robert Cihra, an analyst with Fulcrum Global Partners. "The Street had lost all faith in her and the market's hope is that anyone will be better."
Fiorina, the only female CEO at a company in the Dow Jones industrial average, had been with HP since 1999. But the company's controversial deal to buy Compaq in the spring of 2002 -- after a bruising proxy fight led by one of the Hewlett family heirs -- has not produced the shareholder returns or profits she had promised.
"While I regret the board and I have differences about how to execute HP's strategy, I respect their decision," Fiorina said in a statement released by the company.
On a conference call with reporters, executives said Fiorina was not terminated for cause and that she would receive severance pay -- and a company spokesman said she'll get a payout of approximately $21 million, including stock options (see correction).
Fiorina told analysts in December that Hewlett Packard (Research) had seriously considered breaking up the company on three separate occasions but each time decided against it.
Some industry analysts had argued HP should either split off its lucrative printer and imaging business, or break HP into separate firms, with one focusing on consumers and the other on corporations.
But during a conference call Wednesday morning, HP CFO Robert Wayman, who was named interim CEO, suggested that no major changes in strategy would take place following Fiorina's departure.
"We continue to believe we have the right ingredients for success in the marketplace," Wayman said during the call with Wall Street analysts.
HP stock has been a laggard compared to the shares of rivals such as Dell (Research) and IBM (Research). Shares were trading at only about 13 times 2005 earnings estimates before the announcement, while shares of IBM and Dell traded at 17 times and 26 times forecasts for the current year.
"We continue to believe we have the right ingredients for success in the marketplace," Wayman said during the call with Wall Street analysts.
HP stock has been a laggard compared to the shares of rivals such as Dell (Research) and IBM (Research). Shares were trading at only about 13 times 2005 earnings estimates before the announcement, while shares of IBM and Dell traded at 17 times and 26 times forecasts for the current year.
And even after factoring HP's big move Wednesday, the stock was still trading at around the same price it was at when the company announced its merger with Compaq in September 2001.
The legendary Palo Alto, Calif.-based company has struggled to generate profits in the cutthroat hardware business, particularly in personal computers. In fact, slowing sales and stiff competition in the PC business led IBM to announce last year that it would sell its PC unit to China's Lenovo Group -- a deal that some lawmakers are eyeing for what they call national security concerns.
PCs aren't the only trouble spot for HP. In the market for servers -- the computers used to build corporate networks -- analysts say HP has been squeezed by IBM on the high end and Dell on the low end.]
