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Investors dismayed by mishandled acquisition of Autonomy Corp. that led to $8.8 billion writedown

Board shakeup ousts HP chairman

Bloomberg

Hewlett-Packard Chairman Ray Lane is giving up his chairmanship of the company’s board in a shakeup that underscores investors’ dismay with the botched acquisition of Autonomy Corp.

Directors G. Kennedy Thompson and John Hammergren are departing, while Ralph Whitworth will take over as interim board chairman, the California-based Hewlett-Packard said Thursday.

Lane, Thompson and Hammergren were re-elected in slim majorities in a referendum last month that demonstrated growing dissatisfaction with the company’s performance and takeover of Autonomy.

An $8.8 billion writedown of the company, disclosed in November, capped a three-year stretch of management upheaval, strategy shifts and slowing growth that hammered shares and made it harder for Chief Executive Officer Meg Whitman to turn around growth at the computer maker.

“It’s the right thing, even if a little late,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. Lane “was just barely re-elected to the board and was chairman during HP’s most horrible years. His legendary status didn’t do anything for HP.”

Hammergren and Thompson’s tenure will end after a board meeting scheduled for May, Hewlett-Packard said.

In the runup to the annual shareholder meeting in March, advisers had said that the board failed to properly vet the acquisition of software maker Autonomy, and recommended that investors vote against Lane and some other members of the 11-person body.

Institutional Shareholder Services Inc. and Glass Lewis & Co. faulted the board for the writedown, which followed the discovery of accounting improprieties, and for depleting the stock’s value through years of mismanagement.

ISS had recommended investors vote against Lane and long-serving directors Hammergren and Thompson.

Glass Lewis also urged shareholders to remove Hammergren and Thompson, as well as venture-capital investor Marc Andreessen and lead independent director Rajiv Gupta.