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Wall Street Journal, September 29, 2011 article


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H-P Hires Banker In Defense Move


Hewlett-Packard Co. has hired Goldman Sachs Group Inc. to help the company defend itself against possible activist investors who could push for change at H-P, people familiar with the matter said.



Concerns about H-P intensified when Leo Apotheker was ousted as chief executive and replaced by Meg Whitman. Shown in a combination photograph, Ms. Whitman last year and Mr. Apotheker in June.


H-P has felt vulnerable to possible activist investor pressure amid questions about the company's performance and strategic direction, the people said. The concerns intensified earlier this month when Leo Apotheker was ousted as chief executive and replaced by Meg Whitman.

As a result, Goldman was recently brought on board to help H-P formulate defenses in case it becomes the target of shareholders seeking change, the people added. Typically, companies with such a concern put in "poison pills" – shareholder rights' plans that make takeovers more difficult for activist investors.

An H-P spokeswoman said the company "has long-term relationships with a large number of investment banks." A Goldman spokesman declined to comment.

Goldman is known for its expertise in helping companies strategize how best to fend off unwanted offers. The bank helped advise NYSE Euronext on its defense against a bid led by Nasdaq OMX Group earlier this year.

Activist investors often start accumulating shares of a company they see as undervalued, amassing a large-enough position to agitate the company's board for changes, ranging from new leadership to a break-up.

Analysts have said H-P's seeming lack of direction, the management-related instability, as well as the potential for restructuring its portfolio of hardware and software assets, make the company an attractive target for investor activism.

Some investors and critics have questioned the abrupt hiring of Ms. Whitman. The former head of Internet giant eBay Inc., Ms. Whitman joined H-P's board in January, but doesn't have any experience running a computer hardware, software and services company, especially one the size of H-P, which has a market capitalization of more than $46 billion.

H-P was also lambasted for major changes approved by the board on which Ms. Whitman served and made by Mr. Apotheker before he was let go after 11 months on the job.

H-P's stock fell by 20% in August after the company announced it planned to explore spinning off its personal computer business, nix its TouchPad tablet and smartphones, and buy U.K. software maker Autonomy Corp.

Ms. Whitman supported Mr. Apotheker's decision to explore a spinoff of the PC business. Since she became chief executive, she said she is studying the decision and would come to a conclusion on the unit's fate by the end of the year.

Although private equity firms in recent months have reached out to H-P about whether it was interested in selling the PC business, a sale is seen as unlikely, people familiar with the matter said. H-P will either decide to spin it off if it creates value, or keep it in the company, they said.

—Ben Worthen contributed to this article.

Write to Gina Chon at and Anupreeta Das at


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