Update: HP Board Ousts Fiorina

Fiorina stepped down as chairman and CEO, effective immediately, the company said Wednesday morning. CFO Robert Wayman was named interim CEO and director Patricia Dunn was tapped as non-executive chairman.

In a statement, the board said it will begin a search for a full-time CEO immediately.

"While I regret the board and I have differences about how to execute HP's strategy, I respect their decision," Fiorina said in the same statement. "HP is a great company, and I wish all the people of HP much success in the future."

Fiorina, who engineered HP's controversial and contentious merger with Compaq Computer, was an extremely high-profile executive who's been under fire for the past year.

"Carly Fiorina came to HP to revitalize and reinvigorate the company," Dunn said in the company statement. "She had a strategic vision and put in place a plan that has given HP the capabilities to compete and win. We thank Carly for her significant leadership over the past six years as we look forward to accelerating execution of the company's strategy."

The news comes a day after HP announced the resignation of Sanford Litvack from its board and his replacement by venture capitalist Thomas Perkins.

While many on Wall Street blessed the multibillion dollar Compaq deal, it was not universally praised. Many felt that Compaq had not yet finished digesting its acquisition of Digital Equipment Corp.

"The Compaq deal was stupid--there's no other good word for it. But the bad thing is, it was stupid at the time, not just in retrospect," said Jeff Matthews, general partner at Ram Partners, a Greenwich, Conn.-based hedge fund that holds no interest in HP. "Walter Hewlett correctly tried to stop it. But the board was in a position where it was either support Carly or not, and they had to support Carly, even though it meant doing a really stupid deal.

"They spent $24 billion in HP stock buying Compaq, and they probably could have wired $24 billion directly to the bottom of the ocean and been in about as good shape as they are now," Matthews added.

Peter McMahon, vice president of sales at Protek, a London, Ontario-based HP partner said HP has had partner challenges since the merger. "They've tried to dance to two different tunes. Pre-merger they were 'the' channel-friendly company, but after the merger they have absolutely strained their relationship with the channel. And I really don't think they've had much success on the direct side."

He added that the company could have been the "integrated one-source stop for small businesses, but they've had a difficult time integrating all the sides. One hand doesn't know what the other hand is doing."

Many pundits viewed a recent, unfavorable article about Fiorina in Fortune magazine as a sign that the tide had turned for the CEO.

Wayman, a 36-year HP veteran, will retain his CFO duties, according to HP. Dunn has been a board director since 1998. Both will host conference calls today.

HP shares closed Tuesday at $20 but rose $2.24, or 11 percent, to $22.61 before the market opened Wednesday.

HP is scheduled to report first-quarter results next Wednesday. The company's shareowner meeting is slated for March 16 in Chicago.

Jeff O'Heir contributed to this story.

This story was updated Wednesday with information on Litvack's resignation and partner comments.