Carly Finally Gets the Boot; Critics Dance On Her Grave

Prudential thinks it could be at least six months before HP finds a replacement for ousted CEO Carly Fiorina and at least nine months before "a new CEO takes the reins and a concrete strategy is articulated." It warns that business could drift between now and then and that when a new guy finally takes over it could mean more restructuring.

It says Carly's "departure does nothing to address HP's competitive challenges in the near-term." The company is still straddled with a low-margin PC business, competitive issues in its Enterprise business and a maintenance-heavy services business plus it's got Dell bearing down on its printer franchise.

It says "there are no easy and obvious fixes at HP," which makes "the job of any new CEO quite daunting."

After checking with management, Pru thinks there's little chance - maybe one in five - of the company being broken up.

It also thinks that when HP posts its first-quarter results on Wednesday it may pull in its Q2 guidance, citing the disruption of Carly's departure.

Prudential is praying for a replacement with an "extraordinary operational reputation." It's thinking an IBM guy like former IBM CFO John Joyce, now head of Global Services, or IBM senior VP, integrated supply chain Bob Moffat.

"We do not believe," it said, "the much talked about president and CEO of MCI, Michael Capellas, would be an appropriate choice, given his past association with Compaq as well as his association with Fiorina at HP."

In fact, practically the only name that hasn't surfaced in the last 48 hours is that of PeopleSoft founder and former CEO Dave Duffield, who would seem the most logical candidate if they're looking for an old-school unabrasive HP personality type.

Unlike some other Wall Street firm, Prudential downgraded HP to "underweight."