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Relational's Whitworth to take leave, resign from HP board to focus on health
By Reuters
Tuesday, July 15, 2014 Email this story  |  News Tracker  |  Reprints  |  Printable Version

SAN DIEGO (Reuters)Relational Investors LLC founder Ralph Whitworth will take a leave of absence from his fund to focus on his health.

Relational co-founder David Batchelder and other senior managers will step in and take the reins of the firm for now.

Whitworth will also step down as interim chairman of Hewlett-Packard Co., the latest top-level departure from the computer maker as it struggles to return to consistent growth.

Whitworth has stood in as chairman of the world's largest personal computer maker since Ray Lane relinquished that post in April 2013.

HP has been on the lookout for a permanent chairman. The board will discuss the appointment of a new chair at a regularly scheduled meeting this week, HP said on Tuesday [July 15].

It was unclear what illness prompted the abrupt resignation. The Wall Street Journal cited a person familiar with the matter as saying Whitworth had undergone throat cancer treatment this year.

HP declined to comment on the report. Its shares were flat at $34.09 at mid-afternoon.

"While his presence would be a loss, we believe the blueprint for HP has largely been drawn up and believe HP has made meaningful progress in its restructuring and transformation," Wells Fargo analyst Maynard Um wrote.

HP announced in May it would lay off up to 16,000 more people on top of already-envisioned cuts.

The Silicon Valley icon is trying to reduce its reliance on PCs and move toward computing equipment and networking for enterprises, part of CEO Meg Whitman's effort to return the PC maker to growth. Wall Street analysts credit Whitman with arresting the worst of the revenue declines.

But HP has grappled with turbulence in its top ranks in recent years. Venture capitalist Lane stepped down after HP took a write-down on Autonomy LLC, the software developer it bought for $11 billion and later accused of inflating accounts. Whitworth had led an investigation into Autonomy, whose executives have denied wrongdoing.

Before Lane, Patricia Dunn resigned in 2006 amid criticism over the so-called wiretapping scandal, when she authorized eavesdropping on directors and journalists to plug media leaks.

HP has also switched CEOs in past years. Mark Hurd left amid a sexual harassment scandal of which he was cleared, and Leo Apotheker exited after the bungled Autonomy deal.

Whitworth, 58, has long been a force to be reckoned with in boardrooms. Past successes include convincing ITT Corp. to split into three in 2011, and pushing Timken Co to spin off its steel unit. His fund is pushing to break up Manitowoc Co Inc.

Some executives, including eBay Inc CEO John Donahoe, have contrasted Whitworth's style with the likes of Carl Icahn, who often wages public corporate campaigns.

Apart from HP, Whitworth has served on the boards of 11 public companies, including Genzyme Corp., Mattel Inc. and Waste Management Inc.

While Whitworth's reputation may be outsized, his firm manages roughly $6 billion and is small compared with the likes of PIMCO or BlackRock. Its modest scale makes it vulnerable should investors take their funds elsewhere.

"The perception is that he is the firm and that can make it more difficult," said Geoff Bobroff, an industry consultant who runs Bobroff Associates.

One investor professed support on Tuesday. "Relational Investors has been a manager for CalSTRS for over a decade and we have great confidence in their team to carry on during Ralph's leave," said Anne Sheehan, director of corporate governance at the pension fund.

Relational Investors, one of HP's top 10 shareholders with a 1.49 percent stake as of March 31, wished the hedge fund's co-founder and "his family all the best at this difficult time."

By Supantha Mukherjee and Nadia Damouni


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