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HP’s (NYSE:HPQ)  announcements last month took industry players
and its own shareholders by surprise, with many questioning the wisdom of HP’s
plans to dump its tablet computer, buy Autonomy and potentially get rid of its
PC business, too.

The concerns have led some to wonder if it’s possible for HP
to get out of the deal with Autonomy. And shareholders are wondering what to do
in the wake of all the uncertainty surrounding this tech giant. Bernstein Research
recently answered that question with a new report highly critical of HP’s
executive management and board.

“Based on our conversations with investors, it appears that
the overwhelming majority of large HP shareholders remain opposed to the HP /
Autonomy deal following their conversations with senior executives and the
board,” wrote Toni Sacconaghi, senior analyst with Bernstein Research in the
report. “Following the Autonomy deal announcement, CEO Leo Apotheker was quoted
in the Wall Street Journal as saying that ‘he was hearing a lot of appreciation”
from investors in one-on-one settings about his plans for the company.

“However, our conversations with investors continue to point
to near universal opposition of the Autonomy acquisition…” pointing to the high
price HP is paying – 11 times sales — and the fact that HP has indicated it
believes Autonomy’s addressable market growth is only about 8 percent.  To investors, that just doesn’t add up, and
they are not buying the argument that the sum of the parts is worth more
overall. At least not that much more.

The Bernstein report notes, however, that because HP is
paying cash, it’s unlikely the tech giant can get out of completing the deal,
even if shareholders are opposed. Many place the blame all the way up to the
board of directors level of the company, since they are responsible for the
ouster of former CEO Mark Hurd and the hiring of current CEO Leo Apotheker. The
board also approved the Autonomy deal, and made the decision to pre-announce a
possible spin off of the PC group before actually investigating the options for

While HP may not be able to get out of the Autonomy deal,
activist shareholders could work to replace members of HP’s board, who only
serve for one year terms, according to Sacconaghi,  which could precede a management change at
the top as well.  Nominations for new
directors must be received between Nov. 23, 2011 and Dec. 26, 2011 to be voted
on during HP’s annual shareholder meeting in March.

 Meanwhile, in spite
of their concerns, Bernstein notes that shareholders still find HP to be a good