H-P Chairman Whitworth to Step Down to Focus on Health -- 4th Update

By Anna Prior and Joann S. Lublin 

Hewlett-Packard Co. said interim Chairman Ralph Whitworth, an activist investor known for shaking up corporate boardrooms, has resigned from its board to focus on his health.

The Silicon Valley giant said the resignation is effective Wednesday, and the board will discuss appointing a new chairman at its next meeting, which is set for this week, according to a person familiar with the company.

Mr. Whitworth, who was 58 years old as of a February regulatory filing, is also taking a leave of absence from his investment company, Relational Investors LLC, which he co-founded. Relational said in a statement that it isn't providing any additional information about his health, and an aide to Mr. Whitworth said the executive wasn't taking any press calls.

According to a person familiar with the matter, Mr. Whitworth was being treated for throat cancer earlier this year.

As of mid-December, Mr. Whitworth was expecting to remain H-P chairman for another year or so, a person close to the situation said at that time. The person predicted then that whenever Mr. Whitworth stepped down, H-P directors probably would choose another independent member as his replacement.

Mr. Whitworth has taken on some of the biggest corporate titans over the years, and his agitating has helped oust chief executives, such as Robert Nardelli from Home Depot Inc. and Gary Forsee of a predecessor company to Sprint Corp.

His strategy has been to build stakes, often only 1% of outstanding shares, and fight his way onto the board, where he can influence plans, a tactic he followed at H-P.

Mr. Whitworth, who has been a member of H-P's board since 2011, was appointed interim chairman in April last year after Raymond Lane gave up his powerful chairman's post.

The turnover followed dissatisfaction among H-P shareholders over the botched acquisition of U.K. software firm Autonomy Corp., which H-P bought for $11 billion in 2011 then wrote down by $8.8 billion about a year later. H-P has said it was misled about Autonomy's finances, an allegation denied by the software firm's former chief executive.

Mr. Whitworth, meanwhile, had joined the company's board after his activist investment fund acquired a roughly 1% stake in the H-P. Before becoming interim chairman, Mr. Whitworth had assumed a more visible role in the boardroom, participating in an informal committee created to provide strategic advice to Chief Executive Meg Whitman.

"While I'm disappointed to step down from H-P's board at such an exciting time for the company, it gives me great comfort that H-P is in such talented and steady hands," Mr. Whitworth said Tuesday of Chief Executive Meg Whitman and her leadership team.

Rather than revive the company's long-simmering search for a permanent chairman, H-P could make Ms. Whitman chairman as well, said another person familiar with the matter. Such a move, though, could raise investor scrutiny because the last two executives to hold both spots at H-P were Carly Fiorina and Mark Hurd, both of whom eventually got ousted at the company.

H-P, known largely for personal computers, server systems and printers, has been grappling with stiff competition and big shifts in the technology industry. Challenges across its array of businesses could complicate efforts to revive growth and innovation.

Further evidence that the company's efforts to revitalize have sputtered amid a rapidly changing technology landscape came in May when H-P said it was cutting thousands more jobs.

Ms. Whitman at that time sought to portray the unexpected job cuts as an opportunity to further streamline a company that had grown bloated over the years through multiple acquisitions.

As for Relational, the firm said Mr. Whitworth's duties will be assumed by co-founder David Batchelder and other members of the senior management team.

Write to Anna Prior at [e-mail]

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