TECH STOCKS: H-P Kicks Off Whitman Era With Share Drop

By Benjamin Pimentel, MarketWatch

SAN FRANCISCO (MarketWatch) -- Hewlett-Packard Co. began a new era under a new chief executive by watching its shares fall Friday as analysts focused on the enormous challenges faced by CEO Meg Whitman.

H-P (HPQ) sank 2.1% to close at $22.32 a day after Whitman was named to replace Leo Apotheker, a change that drew mixed reviews from analysts, some of whom wondered if the former eBay CEO was a good fit for the tech giant in its push to become a bigger player in corporate IT.

H-P was one of the top decliners on the Dow Jones Industrial Average (DJI) which was up 38 points.

"While we believe Meg has proven to be a very capable manager leading eBay from a start-up into a household name and one of the largest internet companies, there will be plenty of scrutiny given her lack of experience in the enterprise business," Sterne Agee analyst Shaw Wu said in a note.

Brean Murray analyst Ananda Baruah echoed this view, saying in a note, "We must admit we were underwhelmed at first blush with the appointment of Meg Whitman as permanent CEO replacement of Leo Apotheker given that she's not 'cut from an enterprise or hardware cloth.'"

Also in the red were shares of Cavium Networks (CAVM) which sank 7.2% to close at $28.95 after the company cut its revenue outlook.

But the Nasdaq Composite Index (RIXF) recovered from a wobbly start to rise 1.1% to close at 2,483. But the benchmark ended the week down 5.3%.

The Morgan Stanley High Tech 35 Index (MSH) added 1.2%, while the Philadelphia Semiconductor Index (SOX) moved up 2%.

The sector got a lift from gains in shares of Cisco Systems (CSCO) , which traded up 1.8% to close at $15.61, Dell Inc (DELL) which moved up 2.9% to close at $14.40 and Texas Instruments (TXN) which gained 3.8% to close at $27.22.