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EXCLUSIVE-UPDATE 1-HP sought two IBM execs in CEO hunt -sources

Published 09/29/2010, 10:23 PM
Updated 09/29/2010, 10:28 PM

(Repeats to additional subscribers with no change to text)

* HP approached Mills, Rometty to replace ousted Hurd-sources

* Internal candidates still being considered - source

* HP shares end up 2.2 pct; down 8 pct since Hurd departure (adds details, bylines)

By Gabriel Madway and Ritsuko Ando

SAN FRANCISCO/NEW YORK, Sept 29 (Reuters) - Hewlett-Packard Co made overtures to two senior executives from rival IBM in its search for a new chief executive, but was rebuffed, according to people familiar with the matter.

In the early stages of a closely watched CEO hunt, now into its sixth week, HP reached out to Steve Mills, who leads IBM's software and systems group, according to two sources with knowledge of the approach.

Virginia Rometty, who oversees sales, marketing and strategy for IBM and ranked by Fortune as being among America's most powerful businesswomen, was also approached, one source said.

Executive search firm Spencer Stuart is leading the effort to replace Mark Hurd, who was popular with Wall Street but ousted in an abrupt and controversial manner in August.

HP has said it was looking externally and internally for candidates to helm the world's top technology company by sales, but the company is under some pressure to name a new chief quickly to fill its leadership vacuum.

HP's board may be looking to attract a marquee name as it aims to convince investors it can drive future growth. But both declined to be considered for the job, the sources told Reuters.

Representatives from HP and IBM declined to comment.

The HP's board's search committee is led by John Hammergren, and includes directors Marc Andreessen, Laurence Babbio Jr., and Joel Hyatt.

Leading internal candidates include Todd Bradley, who leads HP's high-volume but low-margin PC division. He is viewed as a strong operational manager, but some board members are worried about his strategic vision, one source said.

The source added that others were concerned because Hurd had been seen as major supporter of Bradley's, one of Hurd's first hires when he came onboard in 2005.

Ann Livermore, the enterprise chief and 30-year HP veteran whose name has been floated also for the CEO job, is seen as a less likely candidate. She was passed over twice for the top job, which went to first Carly Fiorina in 1999 and then Hurd.

And analysts say Dave Donatelli, who runs HP's servers, storage and networking business, is considered a rising star at HP but may not yet be experienced enough to run the entire company.

HP has been criticized by some investors and analysts for its poor handling of Hurd's exit, for overspending in an acquisition spree, and not allocating enough on research and development.

On Tuesday, HP issued a fiscal 2011 forecast that surpassed Wall Street expectations. The company used its analyst meeting to emphasize its growth prospects and the investments its making in the company.

Shares in HP closed up 2.2 percent at $42.53 on Wednesday but are still down about 8 percent since Hurd resigned in early August. (Reporting by Gabriel Madway, Ritsuko Ando and Alexei Oreskovic; Editing by Kenneth Li, Edwin Chan and Lincoln Feast)

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