SAN JOSE, Calif. - Hewlett-Packard Chairwoman Patricia Dunn took the fall Tuesday after admitting she authorized an investigation that relied on "inappropriate techniques" to uncover who was leaking boardroom secrets to the media.
CEO Mark Hurd, who has the respect of Wall Street and is untainted by the investigation at the Palo Alto-based computer and printer maker, will take over, vowing that the probe's methods "have no place in HP." HP's stock rose to a 52-week high.
It was the culmination of a scandal that has rocked Silicon Valley's biggest and oldest technology company, led to investigations by state and federal authorities, and raised questions about one of the most powerful women in corporate America.
Having already concluded that HP's probe broke some California laws, state Attorney General Bill Lockyer indicated for the first time that company insiders are likely to face some criminal charges.
"We currently have sufficient evidence to indict people both within Hewlett-Packard as well as contractors on the outside," Lockyer said in an interview aired late Tuesday on PBS' "NewsHour with Jim Lehrer."
Dunn, who initiated the probe in which private investigators impersonated HP directors and journalists to access their personal phone logs, will remain on the board after giving up the top job on Jan. 18. Hurd will add chairman to his existing positions of chief executive and president, the company announced early Tuesday.
Director George "Jay" Keyworth II, who acknowledged sharing company information with reporters, resigned from the board Tuesday after refusing to do so in May.
Some analysts said Dunn's demotion sent a message to investors that HP was ready to move on, while others said she should have been removed completely.
"She needed to go — she had become a liability to the company whether she liked it or not," said Morningstar analyst Mark Lanyon. "But just removing her from the chairperson role and keeping her on the board is a half-measure at best and probably not appropriate.
"There are still legal matters that could come down on the company," he said, "and the issue is still festering with her there."
Roger Kay, who follows HP as president of the market research firm Endpoint Technologies Associates, had a different take.
"I think the fact that they made the statement that she's going to leave solves most of the problem," he said. "I don't think it's that material precisely when she leaves."
The pressure on Dunn to step down rose sharply when Congress and federal investigators joined the probe of the scandal involving HP's Board of Directors
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