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Mon, Oct 02, 2006 - Page 10 News List

Investors still confident about Hewlett-Packard

DAMAGE CONTROL Despite recent scandal, HP's stock price is back to levels it attained prior to the furore and its chief executive has vowed to restore the company's reputation

AFP , SAN FRANCISCO

Investors say they remain confident in the future of Hewlett-Packard (HP) despite weeks of reputation-tarring boardroom scandal.

HP's stock price was up 6.6 percent on Friday, a day after members of Congress lambasted chief executive Mark Hurd and fallen chairwoman Patricia Dunn for unscrupulous tactics used to plug a boardroom leak.

Dunn resigned on Sept. 22 after becoming the face of an HP investigation that involved impersonating reporters, employees and board members to get personal telephone records.

Investigators also planted tracking software in a bogus e-mail sent to a news reporter in the hope it would be forwarded to her secret boardroom source.

Dunn tenaciously dodged culpability for tactics used in the probe she initiated and held firm that HP executives knew nothing of illegal methods used by investigators.

The hearing closed with Hurd apologizing, taking responsibility for what happened and vowing to restore HP's ethics and image.

While the possibility remained that criminal charges would be filed against people inside and outside of HP, investors showed no sign of punishing the computer maker.

Instead, the week ended with the company's stock price returning to levels it had attained prior to the scandal breaking a month ago.

Hurd's testimony signaled that a strong hand was on the HP tiller and that he would guide the company through the turbulent boardroom drama, according to analysts.

Hurd also appeared to sate the committee's appetite for someone to blame for what happened while distancing himself from personal wrongdoing.

"Hurd's testimony was convincing," Investment firm Merrill Lynch wrote in an analysis.

"Our belief that Mark Hurd will remain at HP's helm is further solidified. We believe investor sentiment will improve on the issue and the focus will begin to shift back toward fundamentals," the analysis said.

Hurd has been lauded as the architect who has transformed HP into a more competitive corporation in the 18 months since he replaced Carly Fiorina as chief executive.

"Mr Hurd will weather this storm," a Baird Stock Exchange study concluded.

"Although we expect continued noise for the next few weeks, we don't believe there is enough substance to this story to warrant a prolonged media and congressional attack," the study said.

Key points that would deflate the controversy included no investors lost money and no executives got rich due to what happened, Baird contended.

A survey of corporate computer clients at a major conference revealed that "customers don't care" about the HP leak scandal would not stop them from buying the company's products, Baird reported.

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