| | Hurd to shepherd HP
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by Andrea Orr in San Francisco
TheDeal.com
29, March 2005
Hewlett-Packard Co. on Tuesday, March 29, named Mark Hurd, the former chief executive of NCR Corp., to succeed the ousted Carly Fiorina as the computer giant's new president and CEO.
Hurd, 48, was chief executive of Dayton, Ohio-based NCR for two years and is credited with dramatically improving the computer service company's performance.
"Mark came to our attention because of his strong execution skills, his proven ability to lead top-performing teams and his track record in driving shareholder value," said HP nonexecutive chairman Patricia Dunn in a statement. "He demonstrated these skills by turning around NCR, which, while smaller than HP, is a complex organization with multiple business segments."
Hurd, who has been cited in reports as a leading candidate to replace Fiorina, will take over a company under severe pressure to raise profits and shareholder value at a time when price competition in the personal computer business is fierce and Hewlett-Packard's PC profit margins are razor-thin.
Since Fiorina dismissal last month over disagreements with HP's board over how to execute the company's strategy, speculation arose that HP might pursue some sort of spinoff of its computer business to enable it to focus on its far more profitable printing division. But while the company's PC unit is sometimes regarded as a drag on its printing profit, analysts said such a large sale would be difficult to complete and could fail to arouse buyer interest. Additionally, analysts said HP might opt instead to boost its profitability by pursuing smaller alliances and division sales.
Yet keeping HP on its course could be even more challenging. The company's stock tumbled 50% during Fiorina's five-year tenure, and HP is still trying to maximize benefits of the $19 billion acquisition of Compaq Computer Corp. in 2002, which failed to produce the kind of advantages and consistent profit growth Fiorina had promised.
HP also continues to face challenges reviving its struggling information technology division and defending its leading market position in the server and printer businesses amid growing competition.
Hurd, who at NCR oversaw a company with roughly $6 billion in annual sales, must adapt to running a complex company with annual revenue of more than $80 billion, multiple product lines and seven main operating units. In addition, he inherits a corporate culture that before Fiorina, had emphasized promoting executives from within the organization.
Yet Hurd has proved his turnaround abilities while at NCR, which makes banking and database equipment ranging from ATMs to self-checkout equipment for supermarkets. He has overseen a period of robust growth for the company and helped restore its key retail division to profitability.
Analysts applauded HP's choice.
"Hurd has been a very operations metric-focused CEO and a driving force in [NCR's] turnaround," said Merrill Lynch & Co. analyst Steve Milunovich in a research note.
NCR stock has risen more than 300% in the past two years. Last year the company's profits increased fourfold to $290 million, and revenue rose about 7% to $5.98 billion.
NCR said Tuesday that board member James Ringler had been appointed interim chief executive.
NCR plunged 17.2% Tuesday to close at $31.40. HP shares increased 10% to $21.78. |
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