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After Hours Action: Google, HP

A shocking management change and a major board overhaul left investors grappling for answers in the after hours. What must you know?

AFTER HOURS ACTION: GOOGLE

After the bell, the Fast traders turned their full attention to Google , eager to see if there were any surprises in its profit report.

Well, there were surprises all right and they caught the traders – as well as everyone else – off their game.

On Thursday, the Internet search giant stunned the Street by announcing that its rock star CEO Eric Schmidt would resign from his current position and that co-founder Larry Page would take charge of day-to-day operations as chief executive officer starting April 4.

However, Schmidt isn’t leaving entirely; he will assume the role of executive chairman, focusing on deals and government outreach, among other things. And Google said other co-founder Sergey Brin will focus on strategic products.

The Street is mixed on what to make of it. UBS analyst Brian Pitz says "The Street will think it's a negative; that there is probably some issue going on.” However Colin Gills of BGC counters, "It's not like Larry (Page) wasn't there. It will be interesting to see what he'll do that's different, what he could not have done in his prior role."

Then there were the numbers.

Google easily topped expectations, with a profit of $8.75 a share excluding one-time items, up from $6.79 a share in the same period a year earlier.

Analysts who follow Google saw the company earning $8.09 a share. Sales rose to $6.4 billion in the last 3 months of 2010.

Should you buy on the earnings strength? Or run for the hills because of the management shake-up?

Karen Finerman is concerned. "I don’t love the change," she says. They really need a grown-up and Eric Schmidt was supposed to be it. It concerns me that he tweeted “Day-to-day adult supervision no longer needed!" However she also says she'll give Page some time before she makes a decision to hold or sell out of her position.

Joe Terranova sees developments as aggressive and positive. "Google is facing a growing challenge from Facebook," he reminds. "I think the management change is a show they’re getting ready for battle."

Brian Kelly is somewhere in the middle. He suggests keeping an eye on the company's expensea and margins. "I’m concerned that without having Eric Schmidt, that Google will go back to spending money frivolously," he says.

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AFTER HOURS ACTION: HEWLETT PACKARD

No earnings to tell you about here, though there were significant developments in the after hours.

In a major shake-up in the company's stratosphere, Hewlett-Packard said four directors were leaving.

According to a Bloomberg report, the move was aimed at “removing directors considered loyal to former Chief Executive Officer Mark Hurd.”

As you likely know, Hurd was forced out last year over allegations of sexual harassment and inaccurate expense reports.

In a separate report, the AP said, Hewlett-Packard is looking to investigate the circumstances of Hurd's departure, including the large severance package he received.

How should you trade now?

Guy Adami says, "I don’t expect the stock to fall out of bed on any of this news."

"It doesn’t really change my outlook either," adds Dan Niles of Alpha One in a live interview. He thinks what's most important is the strategy laid out by new Chief Executive Leo Apotheker.

"I agree that it's all about Apotheker's strategy," says Joe Terranova. "That should be the biggest catalyst for HP stock."

Hear what Stifel Niicolaus analyst Aaron Rakers has to say about these developments. Watch the video now!

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TECH ROUT CONTINUES

Looking at the tech sector broadly, the Nasdaq was the worst performing index with titans such as Apple trading to the downside.

Should you buy the dip? Or run the other direction?

Karen Finerman thinks Apple is a buy on the current pullack. "I pulled the trigger and established a long position in Apple," she says.

Guy Adami is watching the technicals. "Over 100 million Apple shares traded over 2-days with a reversal earlier in the week," he explains. "Technically that’s pretty bearish. I think Apple is setting up for a move down to $310."

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CLOUD STORM

There was another sign of a tech breakdown in Thursday’s markets. In the cloud space Salesforce, Rackspace, and other cloud names closed lower on the back of F5's disappointing earnings.

What’s the trade?


"I think F5 washed out," says Guy Adami. "I’d go long against $106.10."

On the pullback, Brian Kelly says, "I’m a buyer of QLogic and Emulex."





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Trader disclosure: On Jan. 20, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (GLD) Puts; Terranova Owns (UPL); Terranova Owns (VRTS); Terranova Owns (PVH); Terranova Owns (GM); Terranova Owns (CVI); Terranova Owns (CNQ); Terranova Owns (LTD); Terranova Owns (C); Terranova Owns (PEP); Terranova Owns (CPX); Terranova Owns (ARUN); Terranova Owns (MS); Terranova Owns (RSH); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman's firm is short (IJR); Finerman's firm is long S&P puts; Finerman's firm is long Russell 2000 puts; Finerman owns (AAPL); Finerman's firm owns (AAPL); Finerman owns (BAC); Finerman's firm owns (BBY); Finerman owns (BP); Finerman's firm owns (BP); Finerman owns (C); Finerman's owns (GOOG); Finerman owns (HPQ); Finerman's firm owns (HPQ); Finerman's firm owns (IBM); Finerman owns (JPM) and (JPM) leaps; Finerman's firm owns (JPM) and (JPM) leaps; Finerman's firm owns (MCD); Finerman owns (MSFT); Finerman's firm owns (MSFT); Finerman's firm owns (TGT): Finerman's firm owns (WMT)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
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Virtus Investment Partners Owns More Than 1% Of (XLP)
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Virtus Investment Partners Owns More Than 1% Of (XLI)
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Virtus Investment Partners Owns More Than 1% Of (CLB)

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Are Long The Euro
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (DBA)
Accounts Managed By Kanundrum Capital Are Short The Yen

For Simon Baker
Baker Ave Owns (FFIV)
Baker Ave Owns (GDXJ)
Baker Ave Owns (GLD)
Baker Ave Owns (MOS)
Baker Ave Owns (T)
Baker Ave Owns (UNH)
Baker Ave Is Long the S&P

For Barry Ritholtz
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For Dennis Gartman
Funds Managed by Dennis Gartman are short Yen
Funds Managed by Dennis Gartman are short Sterling
Funds Managed by Dennis Gartman are long gold
Funds Managed by Dennis Gartman are long silver
Funds Managed by Dennis Gartman are long Natural Gas
Funds Managed by Dennis Gartman are long the Swiss Franc
Funds managed by Dennis Gartman are short the Euro

For Scott Davis
As of 12/31/10, Morgan Stanley owned 1% or more of (HON) common equity
Within the last 12 months, Morgan Stanley has received compensation for IB services from (GE), (HON), (TYC)
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from (GE), (HON), (TYC)
Within the last 12 months, Morgan Stanley has received compensation for non-investment banking services from (GE), (HON), (TYC)
Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to (GE), (HON), (TYC)
Morgan Stanley & Co. is a market maker in (GE), (HON), (TYC)

For Brian Stutland
Stutland has no disclosures.

For Dan Niles
Alpha One Capital Partners has a position in (IBM)

For Aaron Rakers
Stifel Nicolaus is a market maker in (HPQ)
Stifel Nicolaus or an affiliate provides or in past 12 months has provided investment banking services to (HPQ)
(HPQ) is or in the past 12 months was a client of Stifel Nicolaus or an affiliate

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