Image: Mark Hurd
Paul Sakuma  /  AP file
“This is a very elegant solution to a tricky situation,” one analyst says of HP's move to have Mark Hurd as new Chairman.
updated 9/12/2006 5:50:54 PM ET 2006-09-12T21:50:54

After replacing Carleton Fiorina as Hewlett-Packard’s chief executive nearly 18 months ago, Mark Hurd quickly cobbled together a successful comeback from the jumbled pieces left behind by one of corporate America’s most powerful women.

Now HP is counting on the no-nonsense Hurd to clean up a new mess as he prepares to follow another high-profile woman as chair of the Palo Alto-based company’s dysfunctional board of directors.

Industry analysts say Hurd’s track record as CEO and straight-shooting style make him the logical pick to replace HP Chairwoman Patricia Dunn in January as the company copes with the backlash from its investigators’ privacy breaches while trying to plug a media leak.

“This is a very elegant solution to a tricky situation,” said technology industry analyst Cindy Shaw, a former HP employee.

Investors seemed to agree as HP’s shares gained 56 cents Tuesday to close at $36.92 on the New York Stock Exchange. The stock price hit a new 52-week high of $37.25 earlier in the session.

HP’s market value has soared by nearly 70 percent, or $38 billion, since it lured Hurd away from NCR Corp., a Dayton, Ohio computer services company best known for making automated teller machines.

Hurd, 49, arrived at HP as the antithesis to Fiorina, whose flamboyance helped make her one of the country’s most visible CEOs.

While Fiorina always savored the spotlight, Hurd has shunned it. He also seems more approachable than the sometimes abrasive Fiorina, with his collegial style that helped raise morale among HP’s employees even though the company is in the process of laying off 15,000 employees.

“He is very personable,” said Roger Kay, who follows HP as president of Endpoint Technologies Associates, a market research company. “Even when he is delivering a hard message, he can use affable humor to soften it.”

Most importantly for HP, Hurd has snapped one of Silicon Valley’s best-known companies out of a prolonged funk.

Analysts give Fiorina some of the credit for overcoming a boardroom revolt to buy Compaq Computer Corp. for $19 billion in 2002. But that deal never paid off until Hurd arrived to cut costs, trim bureaucracy and redefine workers’ priorities.

“Mark has brought more clarity and simplicity in speaking and thinking about the company,” said Forrester Research analyst Frank Gillett. “That has helped HP, both internally and externally.”

That progress is reflected on HP’s bottom line. Through the first nine months of its current fiscal year, HP earned $4.5 billion, more than doubling from the same time in the prior year.

“Mark has improved the company’s execution more than I thought was possible,” Shaw said. “HP’s employees have gone from feeling like losers to feeling like winners in less than two years.”

Hurd will face a different challenge as chairman of a board immersed in a legal morass.

Incensed by a series of media leaks about information discussed at board meetings, Dunn earlier this year authorized the hiring of an outside firm to identify the culprit. As part of the probe, the investigators masqueraded as HP directors and reporters who had covered the company to obtain personal phone records — a tactic, known as “pretexting,” that broke California laws, according to California Attorney General Bill Lockyer.

The FBI and Congress also are examining whether HP’s investigators broke any laws.

The fallout prompted HP to announce Tuesday that Dunn would step aside as chairwoman in January, although she will remain on the board.

Two other HP directors have also resigned, giving Hurd the opportunity to hand pick the replacements.

Prominent Silicon Valley venture capitalist Tom Perkins quit in May to protest HP’s intrusive investigation and George Keyworth II stepped down Tuesday in contrition for leaking the information that triggered the inquiry.

“Mark is going to want to make sure this wound is fully irrigated and patched up as quickly as possible,” Kay predicted.

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