Marketplace Report: HP May Oust Chairwoman

The board of computer giant Hewlett-Packard is considering the ouster of Chairwoman Patricia Dunn for allegedly ordering an investigation of company personnel she suspected of leaking information to the press. Amy Scott of Marketplace talks with Madeleine Brand about the story.

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MADELEINE BRAND, host:

Back now with DAY TO DAY. The head of Hewlett-Packard, Patricia Dunn, may lose her job over a boardroom scandal. Federal and state prosecutors are looking into whether she and other HP staffers broke the law when they spied on board members who may have leaked confidential information to journalists. MARKETPLACE's Amy Scott is here. And Amy, bring us up to date on what's happening there at HP.

AMY SCOTT: Well, as you know, Hewlett-Packard hired private investigators last year to find out who in the boardroom was leaking information to the press. Details kept popping up in news stories that only a board member would have known. So to find the leaker, the investigators used an unorthodox tactic known as pretexting. By posing as someone else, they were able to access the phone records not only of board members, but also nine reporters that were covering HP.

Now, apparently, HP's board held a three-hour emergency phone conference yesterday to talk about the investigation and also about the future of HP's board chair, Patricia Dunn. She oversaw the leak investigation. And Dunn has said she was not aware that anything illegal had been being done in this investigation, and that she has no plans to step down unless the board asks her to. The board is apparently continuing those discussions today, and Ralph Ward with Boardroom INSIDER doesn't expect Dunn to last through the year.

Mr. RALPH WARD (Boardroom INSIDER Magazine): This investigation was launched by the board. It did go badly off the rails. Someone has to be responsible.

SCOTT: Other candidates might be HP's general counsel Ann Baskins or someone else in the legal department. Most seem to think, though, that CEO Mark Hurd is removed enough from this that his job is safe.

BRAND: Hm. But still, this has been a scandal that's been in the newspapers for at least a week. How does a company recover from something like this?

SCOTT: Well, it's really interesting. HP's stock has actually been doing fine. It has basically recovered its losses since this news came out, partly I think because Mark Hurd - the CEO I mentioned - has been leading quite a successful turnaround of the company. But a big part of recovering will be PR, and not just outside the company, but inside. Apparently, Hurd sent both e-mail and video messages to employees on Friday, trying to boost morale.

And coming up later on MARKETPLACE, families talk about the ordeal of applying to the 9/11 Victims Compensation Fund.

BRAND: Okay, and we'll listen for that. Thank you, Amy. Amy Scott of public radio's daily business show MARKETPLACE, produced by American Public Media.

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