HP Tries to Sneak out Resignation News Friday Afternoon

When the new broke that investigators looking for the source of boardroom leaks at Hewlett-Packard had tried to secure information by impersonating others, Patricia C. Dunn should not only have resigned as chair of the board, but she should have quit altogether. For reasons known only to the board members, she stayed on until Friday afternoon. Then at 4:25 pm Eastern time, Businesswire ran the release announcing she was out all the way. Friday afternoon releases used to be for burying the news, but in the age of the internet, that doesn’t happen anymore. HP just looked sneaky as well as stupid doing it, betting no one would notice as the Jewish New Year began at sunset.

Press releases on Friday afternoon, when most of the press has met the deadline for Saturday’s paper, is an old and dishonorable tradition. Whether it’s the White House putting out uncomfortable war news then, or in the case of a business, announcing an unexpected loss, the hope is that no one will report on it, and if they do, that it will get into Saturday’s paper, which has the fewest readers of any edition. It used to work, sort of.

Now, there are a number of factors that work against it. Wall Street in particular judges a company’s management on how forthcoming it is. Bad news doesn’t make investors happy, but post-Enron, bad news coupled with attempts to hide it is beyond forgiving in many minds. Next, a great many people who use the internet to do their research on a company are going to get the press release when they do a search no matter what time it was released. Then, there is the matter of after hours trading, which means that the market is closed but not really. The news will shift the price regardless (indeed, the price of HP stock went up 1% by 5 pm Friday). And there are new media outlets that pay particular attention to odd hours news.

HP made a very basic mistake in handling the departure of Ms. Dunn last week. It presumed that people would think her resignation/firing would be bad news. However, after the “pretexting” scandal broke, she was radioactive in the minds of investors, and the farther away she went, the better. This is probably unfair to her as a professional and as a human being, but markets are not really interested in that.

HP will probably recover from the scandal, and Ms. Dunn will probably not end her days selling pencils on the street. Yet a degree of damage was done to the trustworthiness of the HP board. Frankly, this journal will need to be sold on the next non-financial good news they have to peddle. They aren’t credible right now, and it will take time for folks to forget the attempt to hide the truth. HP has been better than that in the past.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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