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H-P's Capellas leaves top post

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Ex-Compaq Computer chief and Hewlett-Packard's (NYSE:HPQ) $15.05 -9.7% president Michael Capellas said today that he will be leaving Hewlett-Packard's top post to pursue "other career opportunities," which many speculate will be at WorldCom.

In a statement, Hewlett-Packard's CEO Carly Fiorina said that the company has reached a "natural transition point," and that she fully supports Capellas' decision to leave the company.

H-P said the position of president would not be filled and that the executives who reported to Capellas would now report directly to Ms. Fiorina. Capellas joined H-P when the company bought Compaq Computer, where Capellas had been CEO.

Dow component Hewlett-Packard (HPQ) fell sharply to test its rising 21-day SMA of $14.97 and trade a morning low of $14.76, dragging the Dow Industrials (INDU) 8,443 -1% lower, but holding just above its 21-day SMA of 8,413, with a morning low of 8,431.

The Morgan Stanley High Tech Index (MSH.X) 288.28 -3.2%, which is a narrow-based index of 35 high-tech company's, of which HPQ is a component, also dropped sharply on the news.

Sector action in the early going is broadly negative with the Fiber Optic Index (FOP.X) 37.81 -6.13%, Networking Index (NWX.X) 119 -4%, Semiconductor Index (SOX.X) 287 -4% and Wireless Index (YLS.X) 47.31 -3.8% pacing declines.

This action as the tech-heavy NASDAQ-100 Index (NDX.X) 986 -2.25% and actively traded NASDAQ-100 Index Tracking Stock (AMEX:QQQ) $24.51 -2.23% leading the major indexes lower.

On the plus side, the HMO Index (HMO.X) 516 84 +0.94%, Oil Index (OIX.X) 254.78 +0.4%, Biotech Index (BTK.X) 350 +0.27% and S&P Banks Index (BIX.X) 275 +0.14% post modest gains.

Merger news this morning has Laboratory Corp. (NYSE:LH) $23.66 -12% saying it will buy Dianon Systems (NASDAQ:DIAN) $46.66 +16.09% for $47.50 per share, or approximately $598 million. Laboratory Corp. (LH) said it anticipates the deal to be accretive to Lab Corp's 2003 diluted earnings per share by approximately $0.05.

Share of electric utility Duke Energy (NYSE:DUK) $18.84 -5.6% lead the Utility Index (UTY.X) 236 -1.4% lower after late Friday's announcement that it had received a subpoena for information related to its activities in the California energy markets. Williams Company's (NYSE:WMB) $2.23 -14.5% also announced late Friday that it had received a subpoena on Friday regarding similar information.

Also weak in the utility sector are shares of Reliant Resources (NYSE:RRI) $1.98 -12% after it confirmed that it has also received a subpoena from the U.S. Attorney in the North District of California requesting information concerning the California energy markets.

Jeff Bailey

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