HP may now be looking outside for CEO

SAN FRANCISCO (MarketWatch) � In giving an update on Hewlett-Packard�s search for a new chief at an analyst meeting earlier this week, acting CEO Cathie Lesjak said H-P�s board was looking at �good internal candidates� and �good external candidates.�

That has led some analysts to believe the pendulum at H-P (HPQ 42.56, +0.03, +0.06%) may lately have swung toward an external pick, as the search drags on two months after Mark Hurd�s abrupt exit that triggered the leadership crisis at the Silicon Valley giant. Earlier rumors had been pointing to an internal candidate among the company�s top executive ranks. Read full story on internal candidates for H-P's CEO slot.

�If they really liked one of the internal people, they would have already named them CEO, as that is an easy thing to do,� Hapoalim analyst Kevin Hunt said in an e-mail interview.

�The fact that they had the analyst day without a CEO tells me they must be seriously looking at some outsiders and haven�t been able to finalize anything yet, or getting them to leave their current position is complicated,� he added.

The company could still turn to an outsider, he added, �but it now seems more likely outside than inside, whereas it seemed the other way before.�

Citigroup�s Richard Gardner offered a similar view in a note, saying, �The absence of an announcement increases the likelihood that H-P is leaning towards an outside candidate.�

Not necessarily, said Mel Connet, managing director at Heritage Search Partners, an executive search firm based in Menlo Park.

He said that while it may be true that H-P is leaning toward an internal candidate, it is also the board�s fiduciary duty to consider external choices. That process of exploring outsiders takes time, he added, �unless all those candidates just say, �No.��

There�s an even bigger reason for the H-P board to move cautiously, he added. �You�ve got a board here that�s O-for-two. They�ve got to get this one right. Their fiduciary duty is to try to exercise the greatest caution.�

�Speed is important,� he added. �But getting it right is more important.�

In any case, the speculated internal candidates were present at H-P�s analyst day to outline the tech giant�s plan for the coming year and beyond. Read full story on H-P's analyst meeting

They included Ann Livermore, head of HP�s enterprise business, Todd Bradley, who is in charge of the PC business, Dave Donatelli, head of the storage, networking and enterprise servers business and VJ Joshi, head of H-P�s printing business.