Please ensure Javascript is enabled for purposes of website accessibility

Tech Watch: Key Board Changes at Google and Hewlett-Packard

By Alex Dumortier, CFA - Jul 16, 2014 at 10:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

HP's chairman steps down, while Google adds a high-profile new board member.

U.S stocks are higher on Wednesday morning on, among other things, reports that 21st Century Fox made an $85 per-share offer for Time Warner. Animal spirits are definitely back, at least in executive suites and corporate boardrooms. The benchmark S&P 500 and the narrower Dow Jones Industrial Average (^DJI -0.24%) are up 0.35% and 0.3%, respectively, at 10:20 a.m. EDT. And speaking of boardrooms, there is news this morning concerning significant board changes at two closely followed technology companies: Hewlett-Packard (HPQ -2.85%) and Google (GOOG -0.61%) (GOOGL -0.65%).

At Hewlett-Packard, activist investor Ralph Whitworth has resigned from the board in order to address a health issue (he is also taking leave from Relational Investors, the investment firm he co-founded in 1996). Mr. Whitworth joined Hewlett-Packard's board in 2011, when Relational took a 1.5% stake in the company, before stepping into the chairman's role on an interim basis in April 2013, in a shake-up that saw two long-tenured board members leave.

Mr. Whitworth has been a source of stability at HP, which had gone through four chairmen in under a decade before him. In HP's statement, CEO Meg Whitman called him "a friend and close advisor to me, the HP leadership team and every member of the boar," and a "wonderful contributor to our efforts to turn HP around." If that's the case, then how big is the impact of his departure? That will depend on the choice of his replacement, a matter the directors will discuss at its next meeting. I'd suggest they strongly consider bringing in one of Mr. Whitworth's colleagues at Relational -- at least as a director, if not necessarily as chairman. The activist firm has a much stronger incentive to keep HP's turnaround on track than most other candidates out there.

Either way, investors do not appear overly concerned regarding the matter this morning; they're taking their cues from Intel's strong quarterly results. HP's shares are up 2.4%.

Meanwhile, visionary technology firm Google is adding a bit of old-fashioned industrial know-how to its board with the addition of former Ford CEO Alan Mulally, who left the carmaker at the beginning of this month. This isn't Mr. Mulally's first brush with the technology industry: He was at one time thought to be the leading candidate to replace Steve Ballmer at the head of Microsoft. According to The Wall Street Journal, Mr. Mulally told an acquaintance in 2012 that Microsoft and Google were the only companies he would be interested in leading once he left Ford.

Besides his top-flight managerial experience -- Mr. Mulally is highly regarded for the turnaround he executed at Ford -- he can contribute industry expertise to multiple projects at Google. For one, Google is pioneering a driverless automobile, which raises all sorts of thorny regulatory and legal issues. Google is also dipping into the aerospace industry with its purchase of Titan Aerospace, a maker of solar-powered drones. Prior to joining Ford, Mr. Mulally was the CEO of Boeing Commercial Airplanes, a unit of Boeing. All told, Mr. Mulally is a first-rate addition to Google's board; shareholders ought to be delighted.

Alex Dumortier, CFA has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,752.88 (-0.24%) $-79.66
HP Inc. Stock Quote
HP Inc.
HPQ
$32.49 (-2.85%) $0.95
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$116.54 (-0.65%) $0.76
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$117.42 (-0.61%) $0.72

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
379%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.