H-P Spy Drama The Watergate of Corporate America

Is there a bottom to this story? If so, we’re not close to reaching it. Spy vs Spy at H-P escalated to the public humiliation phase when chagrined and seemingly clueless corp execs are shamed by Senators who are usually subjected to this kind of scrutiny by their constituents. All that pent up Senatorial rage.

Characters are clearly drawn now. Dunn, or Duh!, the Chairwoman, claims she did not know what was going on, takes no responsibility, and thought you can get someone elses phone records merely by asking. Huh? Hurd, or Heard!, is the CEO, the guy who has pleased shareholders by taking control of an organization rife with destructive, internecine battles. He has increased shareholder value (the mantra), and, most important, he says that spying in news rooms and obtaining records under false pretenses is clearly wrong and it will never happen again and he will restore trust at H – P. He was coached well.

You have the scapegoat and you have the hero, and it is clear which is which. For desired outcomes, this is the optimum stance. You want the CEO, going forward, to fix a serious problem and stabilize the company that was doing well before all this.  You really don’t care about a disgraced Chair, who is no longer part of the company. Dunn’s greatest mistake to me from a public relations perspective is that she does not show remorse or offer insight into what occured. Simply being appalled would help.

In corporate drama there are heros and villains, winners and losers. Ms. Dunn may be correct in all her assertions, and Hurd, for all I know, knows much more than is evident and was more culpable than we can see.  In the end, when the stories are written in the newspapers,  filmed for television, and spread through blogs and Internet news sources , we are left with impressions, sound bites, and a storyline.   Mark Rose, New York

H-P Drama Heats Up, Stock Hit

As we predicted, new revelations at H-P are elevating the Spy vs. Spy boardroom drama to another level. An article in The New York Times yesterday (registration required) recounts an H-P executive branch that seems as out of control as the Nixon Whitehouse. So far today the stock is down 4% and CEO Hurd is going to hold a press conference. Today’s Wall Street Journal article on H-P (subscription required) insinuates that the CEO knew more than previously thought.

No need to editorialize about yesterday’s Times article. Stitch together excerpts and you get a top notch corporate thriller:  A H-P internal dossier subtitled “Covert Operations” discusses feasibility studies about placing investigators acting as clerical employees or cleaning crews in the San Francisco offices of CNET and The Wall Street Journal. Phases of the operation were code named Kona I and Kona II. I repeat the headline from my initial Sept. 8 post on this topic: How can you be so stupid?

Significantly, the Times story is co-authored by Damon Darlin, who has been writing about the scandal from the outset, and Kurt Eichenwald, the Times’ venerable investigative business reporter. Eichenwald’s most recent book is “Conspiracy of Fools,” about Enron. Does he smell a book here? Mark Rose in New York 

Hurd On The Street

This is the news from MarketWatch/Dow Jones: Hewlett-Packard Co. said Tuesday that embattled Chairwoman Patricia Dunn will retain her position until the company’s January 2007 board meeting, when she will be replaced by company Chief Executive Mark Hurd.

The timing is about right. We suspected that she would be axed around now, with Hurd consolidating power. Amazing how quickly this news shot to the front page of news weeklies and top-line television news shows. The story faded in the wake of 9/11 remembrances and now pops up again. As it will again and again.

Terrible PR imbroglio for the company, eh? Not really. The stock has risen fairly steadily – see MarketWatch charting for HPQ – since we first wrote about the H-P Boardroom Spy vs Spy drama on Friday, September 8.

The place for H-P boardroom news and other juicy insider news and commentary is the DealBreaker.com . Ever wonder what Ben Bernanke looked like when he wrote his hippie dictionary in 1968? Wonder no more. Check out DealBreaker. Mark Rose, New York

How Stupid Can You Be?

I would like to be more eloquent and insightful but … the mess at Hewlett-Packard just leaves me shaking my head. Masked identities, accessing phone records of reporters and Board members, private eyes, spying on their own Board members. What sort of hubris and cunning drives that sort of corporate behavior? So far, the only good guy here is Tom Perkins, established and respected Silicon Valley VC and long-time H-P Board member, who blew up and quit when he found out about the Spy vs. Spy routine at H-P. 

Five reporters at The Wall Street Journal gang up today for a page one story that digs into the role of “prominent Silicon Valley attorney” Larry Sonsini and the H-P non-executive Chairman Patricia Dunn.  What’s frightening here is  Sonsini’s apparent legal opinion that “pretexting,” the method used to obtain protected information, is common practice and within the law. I am sure that we will have a slew of regulatory, legislative and legal opinions about that.

This is the sort of juicy corporate drama that WSJ excels in and since they were victim of shenanigans, as were other news outlets, they will have very sharp knives for this one. See WSJ story – subscription required. See New York Times story Hewlett-Packard Spied On Writers In Leaksregistration required.

There will be firings, lawsuits, criminal investigations and perhaps trials, legislation introduced and debated, books, movies, TV PR blitzes and salivation at each new revelation. Reporters will be very aggressive pursuing this story. – Mark Rose, New York


Dell Closes The Loop

I had yet one more communication from a Dell “customer advocate” regarding any concerns I may have about a potentially exploding battery in my Dell notebook computer. Dell certainly deserves kudos for its aggressive “social media outreach” during this crisis. When I originally blogged about this – see Dell On The Blog Offensive – I was a very dissatisfied long-term customer. The other day “Dennis UID#01129265″ from Dell sent an email asking if I had any other questions before he archived our communication. He was the second Dell rep I had communicated with.

What’s significant here is Dell proactively reaching out through blogs and email to elicit comment, continue dialogue and assist with problems. Richard Levick posts an excellent analysis of of the Dell exploding battery crisis on his blog. I believe there were more nuances to this story than Richard acknowledges (legal issues involving public disclosure/the story leaked) but his crisis communication counsel is obviously based on intelligence and experience, and much appreciated. – Mark Rose, New York

Corporate Blogs Still Suck

Do they? See Direct 2 Dell blog.