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HP's Patricia Dunn to step down in January

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  • Alfred
    HP s Patricia Dunn to step down in January George Keyworth, who was singled out in press leak probe, also quits Dunn done as HP chairman Sept. 12: Chairman
    Message 1 of 1 , Sep 12, 2006
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      HP's Patricia Dunn to step down in January
      George Keyworth, who was singled out in press leak probe, also quits

      Dunn done as HP chairman
      Sept. 12: Chairman Patricia Dunn will step down in January because of
      the corporate spying scandal. "On the Money's" Dylan Ratigan conducts
      a roundtable discussion on the moves.

      Ms. Dunn should be fired immediately. Then, she and the rest of her
      board should be tried for crimes against the employees of HP. I am
      willing to bet that HP has in their mission statement something about
      being ethical. LOL. Oh, and just so you folks at HP know, I am now
      adding you to my official boycott list.

      SAN JOSE, Calif. - Hewlett-Packard Co. said Tuesday that Patricia
      Dunn will step down as chairwoman of the computer and printer maker
      in January amid a widening scandal involving a possibly illegal probe
      into media leaks. She will be succeeded by CEO Mark Hurd.

      Hurd will retain his existing positions as chief executive and
      president and Dunn will remain as a director after she relinquishes
      the chair on Jan. 18.

      "I am taking action to ensure that inappropriate investigative
      techniques will not be employed again. They have no place in HP,"
      Hurd said in a statement.

      Dunn apologized for the techniques used in the company's probe, which
      included "pretexting," in which private investigators impersonated
      board members and journalists to acquire their phone records.

      "Unfortunately, the investigation, which was conducted with third
      parties, included certain inappropriate techniques. These went beyond
      what we understood them to be, and I apologize that they were
      employed," Dunn said in a statement.

      Also Tuesday, George Keyworth II, the HP director singled out for
      leaking information to the press, resigned from the company's board
      effective immediately.

      The pressure on Dunn to step down began rising sharply Monday when
      Congress and federal investigators entered the fray surrounding HP's
      possibly illegal probe of media leaks. The FBI, the U.S. Attorney for
      Northern California and the House Energy and Commerce Committee all
      joined the California attorney general and Securities and Exchange
      Commission in probing the scandal swirling around HP's Board of

      California Attorney General Bill Lockyer said his office has enough
      evidence to obtain indictments of people within Hewlett-Packard Co.
      and of hired contractors, after the company disclosed questionable
      tactics in a boardroom leak investigation.

      "We currently have sufficient evidence to indict people both within
      HP as well as contractors on the outside," Lockyer said in an
      interview aired Tuesday on the Public Broadcasting Service's NewsHour
      with Jim Lehrer.

      "Crimes have been committed," Lockyer said. "People's identities
      being taken falsely is a crime. People gaining access to computer
      records that have personal information, in California, that's a

      Dunn, a former freelance journalist, was angry about the media leaks
      and commissioned an unnamed outside firm to identify their source.
      They used Social Security numbers and other personal information to
      get phone companies to turn over detailed logs of home phone calls of
      reporters and board members.

      Although frequently used by private investigators, the tactic tests
      the bounds of state and federal law.

      HP's board met for a second time Monday night to discuss whether Dunn
      should remain chairwoman of the Silicon Valley giant.

      Richard Hackborn, who has served on the board since 1992, will become
      lead independent director in January.

      Dunn's entanglement in the pretexting scandal marks a rare stumble
      for one of the most powerful women in corporate America.

      Dunn, then CEO of Barclays Global Investors, joined HP's board in
      1998 and became chairwoman in 2005, taking an active role in running
      the 11th largest company on the Fortune 500.

      She oversaw the ouster of former HP CEO and Chairwoman Carleton
      Fiorina in February 2005, and two months later introduced Hurd as
      Fiorina's successor.

      Hurd wasn't well known on Wall Street or in the financial media
      before taking the reins of HP. But he enjoyed a solid a reputation
      among business experts as a no-nonsense cost cutter familiar with
      nearly every facet of management. HP shares surged 10 percent the day
      his appointment was announced.

      He was previously chief executive at Dayton, Ohio-based NCR Corp., a
      computer services company best known for its ATM machines.

      At HP he orchestrated a cost-cutting campaign that, when it winds
      down later this quarter, will have resulted in as many as 15,000
      layoffs. But morale had been noticeably higher under Hurd than
      Fiorina — until details of the company's leak investigation were
      disclosed last week.

      Although it marks a dark chapter in the company's history, HP could
      benefit from having Hurd consolidate his power, said Roger Kay,
      president of the market research firm Endpoint Technologies

      "It makes perfect sense to give (Hurd) the chairmanship," he
      said. "He has the character, personality and chops to do it. I can't
      think of anyone else you would want to run the company at this point."

      The leak investigation at HP began with a January article on CNET
      Network Inc.'s News.com that included a quotation from an anonymous
      HP source who described a gathering of HP directors at a posh spa in
      Southern California.

      At a board meeting in May, Dunn identified director George Keyworth
      II as CNET's source, as well as the source of other leaks dating to
      early 2005. The board asked Keyworth, 66, to resign, but he refused.
      HP then barred him from seeking re-election.

      His ouster riled another board member, longtime Silicon Valley
      venture capitalist Tom Perkins, 74, who resigned and stormed out of
      the May 18 meeting.

      Perkins' attorney later discovered that private investigators had
      obtained the last four digits of his client's social security number.
      They used that information to open an online account with AT&T, then
      called the telephone company and impersonated Perkins, asking for a
      record of phone calls to and from his house.

      HP's investigators also obtained the phone records of several
      journalists, including those who work at The Wall Street Journal,
      BusinessWeek, The New York Times and News.com.

      Keyworth, who has acknowledged talking to the media, was the former
      science adviser to President Reagan and director of the Physics
      Division at Los Alamos National Laboratory.

      On Tuesday, Dunn defended the need for the investigation.

      "These leaks had the potential to affect not only the stock price of
      HP but also that of other publicly traded companies," she said.

      California's attorney general has already said HP's probe broke two
      California laws governing identity theft illegal access to computer
      records. It's still unclear, however, whether the company or anyone
      acting on its behalf will face civil or criminal charges.

      FBI Deputy Director John Pistole said in an interview Monday with The
      Associated Press that the bureau opened its probe Monday and was
      investigating two possible crimes: illegal computer intrusion and

      "When allegations of a federal crime are brought to the FBI's
      attention we have to make a determination whether we'll initiate an
      investigation," Pistole said. "Obviously if the U.S. Attorney has
      reviewed information and believes there is something for the FBI to
      investigate, we'll work closely (together)."

      He did not give a timetable for when the inquiry would be completed.

      The U.S. Attorney's Office issued a statement saying it
      was "investigating the processes employed in an investigation into
      possible sources of leaks."

      The Congressional committee gave HP a week to name the private firm
      it hired to investigate the leaks and to turn over all "records and
      information related to the company's reported effort to obtain
      private phone records." The request was made as part of the panel's
      ongoing investigation into pretexting.

      The federal investigation further complicates the situation for HP,
      experts said.

      "It opens the company to more scrutiny on a broader and more powerful
      level," said Ken Sukhia, a former U.S. Attorney in Tallahassee, Fla.

      Still, investors have largely ignored the scandal. HP shares were
      trading this week near the top end of its 52-week range of $25.53 to

      "It's certainly embarrassing," said Martin Reynolds, vice president
      of the research firm Gartner Inc. "And it's obviously not the best
      press, but the good news is this is pretty much divorced from the day-
      to-day operations of HP."
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