September 22, 2000 (Computerworld) --
In a strong vote of confidence in her leadership over the past year, Hewlett-Packard's board voted to add the position of chairwoman to its CEO and President Carly Fiorina. Fiorina will take over from Richard A. Hackborn, who had been serving as "non-executive" chairman of HP since Lewis A. Platt's departure last year, and will continue to serve on the board. In other action today, the board authorized a stock buyback of $1 billion. The authorization is planned to offset dilution associated with employee stock plans. Shares will be purchased in the open market or in private transactions, the company said. In a related announcement, HP said that it remains on track to meet its 15% revenue growth target and consensus analyst earnings estimates of $1.03 per share for the fourth quarter. HP shares soared on the news today, jumping more than 7% to $102 5/16. The leap was in contrast to much of the tech sector, which tanked after Intel yesterday issued a warning saying it would not meet earnings expectations in the third quarter (see story). Fiorina's elevation to chairwoman is an endorsement of her plans to revitalize HP, said Laurie McCabe, an analyst with Summit Strategies Inc. in Boston. "It gives her more visibility and puts her in a better position when she is at the bargaining table," to negotiate deals with other companies, McCabe said. Since taking over as CEO from Platt in July 1999, Fiorina has been trying to accelerate HP's transition from a pure-play hardware vendor to a more broad-based vendor of Internet hardware, software and services. Over the past year for instance, HP has announced a series of Internet infrastructure, services and financing initiatives designed to attract more attention to HP in a market that has been dominated so far by Sun Microsystems Inc. The company's bid to buy consulting giant PricewaterhouseCoopers for an estimated $18 billion is another example of the services and consulting direction that Fiorina has set for HP, McCabe said. "I think HP, like other vendors, has realized that they need to be more than just a hardware player," said Joyce Becknell, an analyst with the Aberdeen Group in Boston. "What Fiorina is trying to do is position HP more as a full-service vendor," Becknell said. Getting there, though, will take some more work, Becknell said. Fiorina still needs to resolve several internal issues, such as finding the right balance between growing its profitable hardware business while expanding into the services arena, Becknell said. Her appointment to chairwoman "consolidates her position and gives her a little more power," to resolve such issues, Becknell said.
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