HP’s Hurd Resignation Brought Questions About Scandal, Company Future

Aug 15th, 2010 | By technologynews | Category: Technology

When Hewlett-Packard announced the resignation of its
Chairman, Chief Executive Officer and President Mark Hurd on Aug. 6, it sent a
shockwave throughout the tech industry. Although the scandal behind the
resignation drew its share of rubberneckers a good deal of attention soon
focused on HPs future: namely, how would the departure of its top executive,
one who arguably helped shepherd the company to a position of stability during
his five-year tenure, affect its fortunes in the longer term?

Hurds resignation came after an internal investigation into
sexual harassment claims by a former HP contractor, Jodie Fisher. HP said that,
while it found no evidence of sexual harassment, Hurd
had apparently violated company business policies in order to disguise a
personal relationship with Fisher
namely, actions such as filing false
expense reports.

As the investigation progressed, I realized there were
instances in which I did not live up to the standards and principles of trust,
respect and integrity that I have espoused at HP and which have guided me
throughout my career, Hurd wrote in a statement following his resignation.
This is a painful decision for me to make after five years at HP, but I
believe it would be difficult for me to continue as an effective leader at HP
and I believe this is the only decision the board and I could make at this
time.

In the wake of the resignation, HP CFO Cathie Lesjak assumed
the interim CEO slot. Other company executives insisted that HP would remain
stable and strong, with the research for a top executive currently underway.

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HP is not about any one person, HP director Marc
Andreessen said. We also have a broad and deep executive bench strength that
will continue to lead this company and drive our performance-based culture. HP
is a great company, and the reason HP is great is the people, and the people
are the reason HP will continue to be great.

A few prominent figures rallied to Hurds defense following
the resignation. In
an Aug. 9 e-mail to The New York Times
, Oracle CEO Larry Ellison termed the
HP boards dismissal the worst personnel decision since the idiots on the
Apple board fired Steve Jobs many years ago. That decision nearly destroyed
Apple and would have if Steve hadnt come back and saved them.

It should be mentioned that Ellison and Hurd are reportedly
good friends.

In losing Mark Hurd, the HP board failed to act in the best
interest of HPs employees, shareholders, customers and partners, added
Ellison, who said the HP board had initially split 6-4 over whether to fire the
CEO. The HP board admits that it fully investigated the sexual harassment
claims against Mark and found them to be utterly false.

Hurds severance package was apparently substantial, leaving
little doubt that hell survive this fall from grace. Analysts also believe HP
will pull through the scandal quicklybut continues to face long-term
challenges.   

TBR believes that there will be little day-to-day impact in
the short term, Ezra Gottheil, an analyst with Technology Business Research,
wrote in an Aug. 6 research note. Under a new CEO, TBR believes that there is
an opportunity to revise the role of HP Software, reshaping the division from
its current slow growth to become a driver of revenue and profit growth along
the lines of IBMs Software division.

In order words, Gottheil wrote, despite its success under
Hurt, TBR believes the company will weather its CEO transition. The future
CEOs challenges include competition with IBM, which devotes more resources
than HP to research and development, as well as aggressive manufacturers such
as Acer and Samsung. HPs entrance into the portable-device market, via its
Palm acquisition, also raises its competitive profile vis–vis Apple.

HPs next CEO, in other words, will have their work cut out
for them.

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