In 2013, Hewlett-Packard Company (NYSE:HPQ) has been the best-performing component of the Dow Jones Industrial Average (INDEXDJX:.DJI). Shares are up more than 54%, while the Dow Jones Industrial Average (INDEXDJX:.DJI) itself has risen by only 11.15%, and its second best-performing component, Travelers Companies Inc (NYSE:TRV) , has climbed by just 17.53% in comparison. But this past week gave us Hewlett-Packard Company (NYSE:HPQ)’s worst performance so far this year, with a 7.84% drop — its first decline since the week of Feb. 11.
So what happened?
On Monday, one of the company’s top executives, Senior Vice President Ajei Gopal, announced that he’s leaving the company to join Silver Lake Partners — the private-equity group that’s attempting to take Dell Inc. (NASDAQ:DELL) private. Gopal will probably play a large role in helping Silver Lake turn Dell Inc. (NASDAQ:DELL) around, considering he’s helped in the same capacity at Hewlett-Packard Company (NYSE:HPQ). But Hewlett-Packard Company (NYSE:HPQ)’s turnaround is far from complete, so this isn’t a move Hewlett-Packard Company (NYSE:HPQ) shareholders wanted to see.
On Tuesday, Goldman Sachs Group, Inc. (NYSE:GS) analyst Bill Shope lowered Hewlett-Packard Company (NYSE:HPQ) stock from a “neutral” to a “sell,” saying he could see shares falling 31% from Monday’s closing price of $23.31. That means Shope believes that HP shares, which currently sit at $21.97, will drop to $16.09 sometime in the future.
Wednesday brought little news, but shares fell again, probably in reaction to the downgrade. Then Thursday arrived with more drama, as the company announced that Ray Lane will step down as chairman of the board but will retain a seat. Board members John Hammergren and G. Kennedy Thompson also announced that they’ve chosen to resign from their positions.
Shares closed the day up 1.78%, but they resumed their tumble on Friday, falling another 1.48% during the trading session. The seesawing performance of the stock following the announcements indicates to me that shareholders have mixed feelings on the board members’ moves.
During the most recent shareholder meeting, when board members were re-elected, Hammergren and Thompson received only 54% and 55% of the vote, respectively. Lane didn’t do much better at 58%. Typically, board members receive more than 90% of the vote, so it was clear that a large portion of shareholders weren’t happy with the job these members had been doing. Most analysts cite the $11 billion Autonomy purchase, and the subsequent $8 billion writedown, as the source of shareholder discontent.