HP has a major ethical problem, day 7

I tried to get away from the HP thing, but it is still getting worse for HP. Now Congress is involved.

I saw this quote in the San Francisco Chronicle:

Despite the furor over pretexting, investors have largely ignored the scandal. HP shares rose 27 cents Monday to close at $36.36 on the New York Stock Exchange, near the top end of its 52-week range of $25.53 to $36.73.

A friend who is a stock trader told me that the market might actually be predicting that a new board is coming — and is raising the price in advance of such an event. A new board would mean better leadership for HP, which would increase growth and everything that shareholders love. But, it’s a weird signal to send, most people will see the increase in share price as evidence that the shareholders aren’t willing to do anything about this board. The problem is, what if this board stays in place? Is there any chance that this board will be able to heal the rifts, get through the bad PR, and start doing anything close to what a board is supposed to do? Plus, with Congress getting involved this will be a distraction for top management at HP, even those who aren’t on the board. Will shareholders continue their excitement if this drags on for weeks, or months? Yeah, the PR will go away, we all have short memories and there’ll be stuff that’s more fun to talk about soon (Steve Jobs, please save us from this story!)

This quote, in the San Jose Mercury News, though, captures the mood of most of the people I talk with about this:

“Whatever else happens, it’s a sad day for HP, and a sad day for Silicon Valley,” said venture capitalist Venky Ganesan, managing director of Globespan Capital Partners in Palo Alto. Hewlett-Packard “stood for what we all feel proud about in Silicon Valley. It was an icon about two guys in a garage who had very idealistic notions: non-hierarchical, collaborative, meritocratic. It was about doing the right thing.”

Update: The Los Angeles Times writes more about shareholders’ reticence to punish this board and also says that if CEO Mark Hurd gets tainted by the stench coming out of the board that HP could pay a “catastrophic” price.

44 thoughts on “HP has a major ethical problem, day 7

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  2. “The boardroom intrigue at Hewlett Packard Co. intensified Tuesday as California Attorney General Bill Lockyer said he has “enough evidence to indict” people inside the Silicon Valley icon for snooping confidential phone records. Criminal charges could be filed as early as next week…”

  3. “The boardroom intrigue at Hewlett Packard Co. intensified Tuesday as California Attorney General Bill Lockyer said he has “enough evidence to indict” people inside the Silicon Valley icon for snooping confidential phone records. Criminal charges could be filed as early as next week…”

  4. With the [ring] “tone” on wiretapping set by the Bush administration and the AG, is it really any wonder that individuals atop of other imperial executives would show little compunction about acting in the same manner…

    Food for thought when considering the corrosive costs we are collectively willing to bear in any supposed “war” on terrorism.

  5. With the [ring] “tone” on wiretapping set by the Bush administration and the AG, is it really any wonder that individuals atop of other imperial executives would show little compunction about acting in the same manner…

    Food for thought when considering the corrosive costs we are collectively willing to bear in any supposed “war” on terrorism.

  6. LayZ: I hear yah, but I think this reaches deeper than just the Board, and I have good reasons to believe that. And the wisdom of having a CEO as Chairman? That should set off alarm bells itself.

  7. LayZ: I hear yah, but I think this reaches deeper than just the Board, and I have good reasons to believe that. And the wisdom of having a CEO as Chairman? That should set off alarm bells itself.

  8. Half-step measure…by keeping Dunn on, it sends a signal, a very very bad one. And if Hurd gets mixed in, oh oh…Word I hear, Dunn has dirt on others, saved skin that way, it goes beyond Dunn, from the listserv reports it almost seems, company policy.

    Journos sharpening teeth…

    Funny, from pressy contacts, they will soon report already buncha biggie customers taking them off the approved vendor list, 2 on Fortune 50. Shareholders always protect, long until hit the ground, then they freak sue and claim ripped off, when all obvious a mile away. I hear this is only tip of iceberg, can’t say, but much much more to come, seems this little investigational team has been working overtime well beyond journalists and board members, put it that way. And when that hits…

    So yes, I stand by my six months coverage, in fact, I think it’s half added another six months…

    Long-term it shouldn’t dent, but not with the sheer brazen stupidity HP is running into, rather than away from, almost self-suicide.

  9. Half-step measure…by keeping Dunn on, it sends a signal, a very very bad one. And if Hurd gets mixed in, oh oh…Word I hear, Dunn has dirt on others, saved skin that way, it goes beyond Dunn, from the listserv reports it almost seems, company policy.

    Journos sharpening teeth…

    Funny, from pressy contacts, they will soon report already buncha biggie customers taking them off the approved vendor list, 2 on Fortune 50. Shareholders always protect, long until hit the ground, then they freak sue and claim ripped off, when all obvious a mile away. I hear this is only tip of iceberg, can’t say, but much much more to come, seems this little investigational team has been working overtime well beyond journalists and board members, put it that way. And when that hits…

    So yes, I stand by my six months coverage, in fact, I think it’s half added another six months…

    Long-term it shouldn’t dent, but not with the sheer brazen stupidity HP is running into, rather than away from, almost self-suicide.

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  11. Might be worth getting a position in HPQ just to send a vote of no confidence in the board members coming up for re-election.

    Obviously retaining Dunn on the Board and adding CotB to Hurd’s title is NOT the way to go. WHAT are they thinking!? ((Unless, as stated in a previous post there are binding contracts stating, “Thou shalt not fire me.”))

    Of course, if criminal charges are brought… the SEC trumps those contracts methinks.

    Back to the Apple feeding frenzy of the day…

  12. Might be worth getting a position in HPQ just to send a vote of no confidence in the board members coming up for re-election.

    Obviously retaining Dunn on the Board and adding CotB to Hurd’s title is NOT the way to go. WHAT are they thinking!? ((Unless, as stated in a previous post there are binding contracts stating, “Thou shalt not fire me.”))

    Of course, if criminal charges are brought… the SEC trumps those contracts methinks.

    Back to the Apple feeding frenzy of the day…

  13. And to add to that Hurd is now the Chairman. The CEO should never be the Chairman if you want good corporate governance. This will not make the news go away.

  14. And to add to that Hurd is now the Chairman. The CEO should never be the Chairman if you want good corporate governance. This will not make the news go away.

  15. As mentioned, she remains on the board. HP is stonewalling, doing as little as possible.

    In cases like this, it’s usually the coverup that brings them down, not the actual crime. That’s because someone lies to the police/Feds, then gets reamed for obstruction of justice, perjury, or lying to the police.

    Her resignation is just the curtain going up on the opening act.

  16. As mentioned, she remains on the board. HP is stonewalling, doing as little as possible.

    In cases like this, it’s usually the coverup that brings them down, not the actual crime. That’s because someone lies to the police/Feds, then gets reamed for obstruction of justice, perjury, or lying to the police.

    Her resignation is just the curtain going up on the opening act.

  17. The LA Times article in indicitive of a couple of things. 1) Little to no one outside the SV echo chamber cares much about this story. At least the every day Joe doesnt’ care much. 2), and the is the point that seems to be lost on Scoble…The fear of a Hurd association shows that this is a BOARD issue not a COMPANY issue. Robert, if you’d acutally READ things and not skim them you might get more insight. From the article:

    “The continuing “soap opera” shows that the board is nearly irrelevant in day-to-day management of the company, said Daniel Morgan, a portfolio manager at Synovus Investment Advisors, which owns 30,000 HP shares.”

    Did you catch that? “The board is NEARLY IRRELEVANT in the day-to-day management” So, Robert, at least do the fine employess of HP the courtesy to not indict a whole company of the actions of their board. I know you likely can’t make that distiction in your brain, but it’s an important distinction. Now,if HURD was involed, then I would agree HP has HUGE problems. But for now, this is board issue, not an HP issue.

  18. The LA Times article in indicitive of a couple of things. 1) Little to no one outside the SV echo chamber cares much about this story. At least the every day Joe doesnt’ care much. 2), and the is the point that seems to be lost on Scoble…The fear of a Hurd association shows that this is a BOARD issue not a COMPANY issue. Robert, if you’d acutally READ things and not skim them you might get more insight. From the article:

    “The continuing “soap opera” shows that the board is nearly irrelevant in day-to-day management of the company, said Daniel Morgan, a portfolio manager at Synovus Investment Advisors, which owns 30,000 HP shares.”

    Did you catch that? “The board is NEARLY IRRELEVANT in the day-to-day management” So, Robert, at least do the fine employess of HP the courtesy to not indict a whole company of the actions of their board. I know you likely can’t make that distiction in your brain, but it’s an important distinction. Now,if HURD was involed, then I would agree HP has HUGE problems. But for now, this is board issue, not an HP issue.

  19. Haven’t commented here on this for a few days. Thoughts….

    (1) Stock prices are part of Wall Street. They have extremely little to do with laws, legalities, or anything else BUT investors.

    (2) I agree with you Robert – Dunn should be gone. The sooner the better.

    (3) But what about the _real_ threat to privacy? I’m not speaking about Dunn, who like many others with some power, merely DESIRED to gain private information. No – what about those who actually GAVE OUT that private info?

    That Robert, is what you should be really enraged about when you speak of threats to privacy.

  20. Haven’t commented here on this for a few days. Thoughts….

    (1) Stock prices are part of Wall Street. They have extremely little to do with laws, legalities, or anything else BUT investors.

    (2) I agree with you Robert – Dunn should be gone. The sooner the better.

    (3) But what about the _real_ threat to privacy? I’m not speaking about Dunn, who like many others with some power, merely DESIRED to gain private information. No – what about those who actually GAVE OUT that private info?

    That Robert, is what you should be really enraged about when you speak of threats to privacy.

  21. ROFL – just followed the “congress” link above. It’s a link to stories on Google news.

    The top story, just knocking down the congress one is a fantastic thing – HP Middle East launch a new range of servers – “The HP Integrity Servers”.

    Surely some joke :-)

  22. ROFL – just followed the “congress” link above. It’s a link to stories on Google news.

    The top story, just knocking down the congress one is a fantastic thing – HP Middle East launch a new range of servers – “The HP Integrity Servers”.

    Surely some joke :-)

  23. Well, today I realised that the HP scandal WAS having an impact. We need a new networked colour laser for the office, and we had a quick discussion about what to get.

    One of the criteria is now officially “Not HP”, since we as a company have decided to vote with our feet.

    We know that this particular purchasing decision is unlikely to impact their sales by more than a gazillionth of a percent, but we felt it was right to take a stand.

    Alas, there is no obvious way to make HP’s shareholders HEAR that this is the reason for our decision…

    … except, it would appear, blogs like this.

    Well done – keep the pressure on.

  24. Well, today I realised that the HP scandal WAS having an impact. We need a new networked colour laser for the office, and we had a quick discussion about what to get.

    One of the criteria is now officially “Not HP”, since we as a company have decided to vote with our feet.

    We know that this particular purchasing decision is unlikely to impact their sales by more than a gazillionth of a percent, but we felt it was right to take a stand.

    Alas, there is no obvious way to make HP’s shareholders HEAR that this is the reason for our decision…

    … except, it would appear, blogs like this.

    Well done – keep the pressure on.

  25. No one takes responsibility for their actions anymore. Western culture practically forbids it. Instead, you deny it to the end, only quit if forced to, take the golden parachute, and ride off into the sunset as a multi-millionaire.

    Capitalism is the best system IMHO, but it sure has its dark sides.

  26. No one takes responsibility for their actions anymore. Western culture practically forbids it. Instead, you deny it to the end, only quit if forced to, take the golden parachute, and ride off into the sunset as a multi-millionaire.

    Capitalism is the best system IMHO, but it sure has its dark sides.

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