Thanks to a piece in
The Wall Street Journal
this morning, the Street expected
decision to split into two companies. But the news of CEO Lew Platt's departure came as a surprise.
The company that's often called the granddaddy of Silicon Valley has been
criticized recently for the weak performance of its stock, which has remained at early 1997 levels even as tech stocks in general have advanced. H-P has repeatedly in recent years failed to meet Wall Street earnings expectations, causing shareholders to take a skeptical stance toward management's guidance.
In the wake of the shake-up, the stock was up 5 1/8, or 7.8%, at 71.
"I'm turning 58 today and I feel it's time to find myself a successor at the same time that we are doing this," Platt said on H-P's conference call.
Back in November,
quoted H-P watchers
suggesting that H-P needed to replace Platt or provide him with a more high-profile assistant to reignite the company's underperforming stock. Today, the Palo Alto, Calif., computer giant acted, saying it would spin off a new measurement company to shareholders, sell 15% of that unit to the public and search for a successor for Platt.
Competition for the position will be intense, one H-P executive who requested anonymity believes. "The key watch will be on the CEO search," the executive says. "There are a lot of people out there who would love to run a $40 billion company."
Platt spoke of hiring an outside candidate to replace him on Tuesday's conference call with analysts. The obvious candidate would have been Rick Beluzzo, who used to whisper in Platt's ear about vision until he accepted the CEO job at
in early 1998.
"Platt managed the company as best he could until three years ago, when H-P missed the boat on the client/server and Internet markets. That was about when it lost momentum and its time-to-market advantage," adds Amir Ahari, senior analyst at
. "It definitely would be good to get a different set of eyes in that business."
will provide further details on the ramifications of Hewlett-Packard's moves at 5 p.m. EST.
Net Stocks and Bellwethers Part Company
Once like lovers walking hand-in-hand, Internet stocks and technology bellwethers have gone their separate ways.
Net stocks are once again in favor after seeing a washout in early February.
has climbed back above 130 after trading in the low 80s a couple of weeks ago, while
has added around 40 points after trading to 124 on Feb. 18.
But industry bellwethers have suffered from poor earnings forecasts, downgrades and ongoing litigation.
is now down around 20% from its 143 11/16 high made Feb 20.
is off around 30% from its 110 high made Feb. 1. And
gave back close to 20% of its value last month after reaching a high of 175 15/16 on Feb. 1.
Courtney Smith, CIO of the
Orbitex Group of Funds
said the corrections have come at a time when the market as a whole has been weakened and may not be such a bad thing.
"These things had a huge run," said Smith. "For this market to get hit a little bit, that's a good thing. It brings some reality.
Things had just gone insane."
Smith said he was hoping for more weakness in the sector before getting in but already was "chomping at the bit" to buy some of the stocks. He said he bought Microsoft on Monday and would like to get in on Dell, which he said "still has the best model."
As for Net stocks, Smith said traders that are hopping back on the Net bandwagon "are being more rational" as the recent selloff instilled some fear in investors' minds.
Getty Playing Under/Over Game
Echoing comments he made at an
investment conference last week,
CEO Jonathan Klein forecast revenues to grow 15% in 1999 excluding revenue from acquired companies, up from 18% last year. But this time Klein said he's just being conservative.
"You have to underpromise and overdeliver," Klein told
after his presentation at the
Hambrecht & Quist planet.wall.street
The 15% forecast doesn't include revenues that Getty expects from the markets for consumers and small businesses. Getty plans to launch by October a site that will peddle its vast library of images online to these markets. Rather than risk a delay in that new stream of revenues, Klein said he's opted to not count it in the estimate for now.
Getty's total sales rose 84% to $185 million and 96% in the fourth quarter alone. Sales of CD-ROM and other digital products made up 36% of revenues in the fourth quarter, up 32% for all of 1998.
The company also hopes to cut costs by reducing overlap among the six acquisitions it's made during the last three years. "Integrating business is a big priority this year," said Klein.
Getty was trading 3/8 higher at 19 1/2.
-- Suzanne Galante
Excite-ing @Home News
announcement today that it would split 2-for-1 has also been a boon for
, which is merging with @Home.
H&Q Is a Winning Combination
Companies appearing at the H&Q conference continue to rack up stock gains.
CMG Information Services
, which presented on Monday, is up 17 7/8 or 13.5% at 151 3/16.
(VERT:Nasdaq) is up a strong 8 5/8 or 17% at 58 1/8 and
traded to an all-time high of 55 7/16 today.
Sportsline also benefited from an upgrade today by
BT Alex. Brown
. The firm upgraded Sportsline to strong buy from buy with a 12-month price target of $85. It was trading 3 3/16 higher or 6.4% at 52 13/16.
Staff reporter David Shabelman contributed to this report.