H-P Ousts Fiorina

While a lightning rod for controversy, Fiorina was not without success at H-P. The company got positive headlines when it released its version of the Apple(AAPL) iPod and outlined an innovative storage strategy aimed at stemming inroads from Dell(DELL) and EMC(EMC). Fiorina's critics were largely quieted in early 2004 when the company reported a string of earnings beats.

But the good news came to an abrupt end in mid-August when the company warned that both third- and fourth-quarter earnings would badly miss estimates because of execution issues in its server and storage division.

The stock fell 17% on Aug. 12.

In a conference call, Wayman said the August blowup is the kind of earnings volatility H-P needed to cure.

"What we really have to drive for is a coordinated set of resources that can compete each and every day and not have the kind of disappointment that we had last year," he said.

Still, others say getting smooth earnings from H-P's disparate portfolio will be prohibitively hard.

"The problem here is the economics of the whole tech sector," said Morningstar's Bare. "It's moving into maturity. It's not a growth industry, so they're doing the best with what they have. Sometimes the economics of an industry can just steamroll right over you."

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