* No changes to ratings or stock price targets
* Impaired balance sheet to hold back investments - RBC
* Shares down 2 percent in early trading
April 5 The resignation of Hewlett-Packard Co
Chairman Ray Lane and appointment of activist investor
Ralph Whitworth as his interim replacement is a positive move by
the No.1 PC maker that augers for a more "shareholder friendly"
board, analysts said.
Two other directors also stepped down on Thursday following
an investor backlash over the company's messy acquisition of UK
software firm Autonomy and other missteps.
"The appointment Ralph Whitworth to the chairman role,
albeit temporarily, points a more fiscally conservative and
shareholder friendly board as the debt burden ebbs," Credit
Suisse analysts said in a research note on Friday.
There were no changes in ratings or price targets on the
stock, which has risen 90 percent since it hit a 10-year low in
November when HP said it would write down $9 billion in assets
related to the Autonomy deal. The S&P 500 index has risen
12 percent in the same period.
HP shares were down 2 percent at $21.82 in early trading.
Lane joins the list of prominent casualties of the $11
billion Autonomy deal, for which the company has been criticized
for failing to conduct proper due diligence.
But HP's board and executive leadership has been in tumult
since the departure in 2010 of former CEO Mark Hurd over sexual
harassment allegations and Leo Apothekar's brief stint at the
helm during which the company made several operational blunders.
"While we believe the board changes were somewhat
anticipated ... (we) think the shakeup could result in
longer-term 'shareholder friendly' actions, potentially from a
capital allocation perspective," Wells Fargo analyst Maynard Um
said in a note.
Whitworth, an HP director who runs activist hedge fund
Relational Investors LLC, had said at HP annual shareholders'
meeting in March to prepare for an "evolution" of the board.
HP's stock closed at $22.30 Thursday on the New York Stock
Exchange, well below the stock's intrinsic value of $39.51,
according to Thomson Reuters StarMine data.
The model measures a stock's current value when considering
analysts' growth estimates for five years, and then modeling the
typical growth trajectory over a longer period of time.
Netflix Inc and Best Buy Co Inc are the
only S&P 500 component stocks that have outperformed HP's 56
percent rise so far this year.
According to StarMine, HP has a forward price-earnings ratio
of 6.3, well below the median of 9.4 for the technology sector.
However, in the past year, HP's shares have fallen 4
percent, while the S&P index has risen 11.5 percent.
RBC Capital Markets analysts pointed to HP's "unraveling"
fundamentals in maintaining their "sector-perform" rating.
"Going forward, HP will have to face headwinds in PCs and
printing that are more secular and less macro in nature," the
"Furthermore, HP's impaired balance sheet will make it
tougher for HP to invest in other avenues of growth."
(Reporting by Sayantani Ghosh and Savio D'Souza in Bangalore;
Editing by Ted Kerr)