HP shares fall on Hurd 'sting' link

Shares of Hewlett-Packard fell as much as 5 per cent yesterday after a newspaper report indicated that chief executive Mark Hurd may be linked to a controversial internal investigation of boardroom media leaks.

The Washington Post wrote yesterday that Hurd had approved a "sting" operation on a reporter as part of the investigation, citing an e-mail by a company lawyer.

"I spoke to Mark [ Hurd] a few minutes ago and he's fine with both the concept and the content of the sting," senior counsel Kevin Hunsaker told HP chairwoman Patricia Dunn in a February 23rd e-mail, according to the newspaper.

The deepening scandal over potentially illegal tactics that HP may have employed in its investigation erupted on September 6th.

The computer maker has acknowledged that hired investigators impersonated people to gain the phone records of directors, HP employees and reporters.

Michigan representative Bart Stupak, the senior Democrat on the house energy and commerce subcommittee on oversight and investigations, said yesterday that Mr Hurd should testify before a house subcommittee hearing.

Ms Dunn said earlier this month she would step down in January but remain on the company's board as a director. Mr Hurd was named as her successor.

California state attorney general Bill Lockyer is investigating the case and his office has said it has enough evidence to indict officials at HP and contractors.

Mr Hurd plans to hold a news conference today to discuss the issues relating to the investigation, a company spokesman.

"What began as an effort to prevent the leaks of confidential information from HP's boardroom ended up heading in directions that were never anticipated," Mr Hurd said in a statement yesterday.

"HP is working hard to determine exactly what took place and when, and without all the facts it has been difficult for us to respond to the questions that have been raised. We plan to give as much clarity as we can to these matters."

Shares of the company fell $1.29 (€1), or 3.5 per cent, to $35.49 in early trade on the New York Stock Exchange. The stock's low point in the session of nearly $35 a share marked the biggest drop in more than two years.