HP may now be looking outside for CEO

SAN FRANCISCO (MarketWatch) — In giving an update on Hewlett-Packard’s search for a new chief at an analyst meeting earlier this week, acting CEO Cathie Lesjak said H-P’s board was looking at “good internal candidates” and “good external candidates.”

That has led some analysts to believe the pendulum at H-P (HPQ 42.56, +0.03, +0.06%) may lately have swung toward an external pick, as the search drags on two months after Mark Hurd’s abrupt exit that triggered the leadership crisis at the Silicon Valley giant. Earlier rumors had been pointing to an internal candidate among the company’s top executive ranks. Read full story on internal candidates for H-P's CEO slot.

“If they really liked one of the internal people, they would have already named them CEO, as that is an easy thing to do,” Hapoalim analyst Kevin Hunt said in an e-mail interview.

“The fact that they had the analyst day without a CEO tells me they must be seriously looking at some outsiders and haven’t been able to finalize anything yet, or getting them to leave their current position is complicated,” he added.

The company could still turn to an outsider, he added, “but it now seems more likely outside than inside, whereas it seemed the other way before.”

Citigroup’s Richard Gardner offered a similar view in a note, saying, “The absence of an announcement increases the likelihood that H-P is leaning towards an outside candidate.”

Not necessarily, said Mel Connet, managing director at Heritage Search Partners, an executive search firm based in Menlo Park.

He said that while it may be true that H-P is leaning toward an internal candidate, it is also the board’s fiduciary duty to consider external choices. That process of exploring outsiders takes time, he added, “unless all those candidates just say, ‘No.’” 

There’s an even bigger reason for the H-P board to move cautiously, he added. “You’ve got a board here that’s O-for-two. They’ve got to get this one right. Their fiduciary duty is to try to exercise the greatest caution.”

“Speed is important,” he added. “But getting it right is more important.”

In any case, the speculated internal candidates were present at H-P’s analyst day to outline the tech giant’s plan for the coming year and beyond. Read full story on H-P's analyst meeting

They included Ann Livermore, head of HP’s enterprise business, Todd Bradley, who is in charge of the PC business, Dave Donatelli, head of the storage, networking and enterprise servers business and VJ Joshi, head of H-P’s printing business.

Possible outsiders

That H-P might pick an outsider has not been totally discounted by many analysts.