SAN FRANCISCO (AP) -- Hewlett-Packard Co.'s annual meeting will give shareholders an opportunity to vent their frustration over the personal computer maker's botched acquisitions and other follies that have been plaguing the Silicon Valley pioneer for several years.
The meeting, scheduled to begin at 2 p.m. PDT Wednesday at a personal computer museum in Mountain View, Calif., might have turned into an even bigger gripe session if not for a recent upturn in HP's stock price. The shares have surged by more than 60 percent so far this year on the hope that the company is starting a gradual turnaround under Meg Whitman, who became HP's CEO 18 months ago.
Even with that rebound, HP's stock is still hovering around the same price as when Whitman took over. Meanwhile, the technology-driven Nasdaq composite index has climbed by 31 percent while the Dow Jones industrial average, which includes HP, has gained 35 percent.
Long-time HP shareholders have another reason to be irritated: The company's market value has been sliced in half since Mark Hurd stepped down as CEO in an August 2010 rift with HP's board of directors. That downturn has wiped out about $45 billion in shareholder wealth.
HP's two longest-tenured directors, John Hammergren and G. Kennedy Thompson, are now being targeted in an effort to oust them from the board. Two shareholder advisory firms, Institutional Shareholders Services and Glass Lewis & Co., are recommending both men be removed from the board for their lax oversight of HP's acquisitions and other key decisions.
A group of New York city pension funds that collectively own a small stake in HP already have publicly declared their intention to oppose the re-election of Hammergren and Kennedy. Hammergren, the CEO of pharmaceutical drug distributor McKesson Corp., has been on HP's board since 2005. Thompson, the former CEO of troubled bank Wachovia Corp., joined the board in 2006.
Three other HP directors also are facing resistance to their re-election. Institutional Shareholder Services is advising stockholders to bump HP Chairman Ray Lane off the board while Glass Lewis is pushing for the removal of Marc Andreessen and Rajiv Gupta, who have the next longest tenures after Hammergren and Kennedy.
HP, which is based in Palo Alto, Calif., contends each of its directors deserve another one-year term.
In the past two years, HP has written off more than $17 billion to account for the diminished value of three major acquisitions: technology consulting service EDS, device maker Palm and business software maker Autonomy. The most vexing of the bunch has been Autonomy, where HP alleges it uncovered financial chicanery that the company says drove up the acquisition price by at least $5 billion.
Autonomy's former CEO Mike Lynch, who was fired by Whitman last year, has vehemently denied HP's allegations. The claims are under investigation by the U.S. Justice Department and financial fraud authorities in the U.K., according to HP. At least 12 lawsuits revolving around the handling of the Autonomy deal have been filed against HP.
Most of HP's other troubles stem from a decline in PC sales as more technology spending shifts to smartphones and tablet computers. The upheaval has caused HP's revenue to fall from the previous year in six consecutive quarters in a slump that Whitman has warned is may continue through the rest of this year. To offset the drop-off in PC sales, Whitman has cut about 15,300 jobs in the past year and is still planning to eliminate about 14,000 more.
In the meantime, HP is expanding its lineup of tablet computers and intensifying its focus on other technology fields, such as business software and data analytics, that are more profitable than selling PCs.