Hewlett-Packard CEO Mark Hurd resigned on Aug. 6, touching off a wave of speculation about both the scandal that brought his fall and HP's short-term future.
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 was soon focused on HP's future: that
is, 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?
Hurd's 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
-specifically, 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
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 search for a top executive currently underway.
"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 Hurd's defense following the resignation.
an Aug. 9 e-mail to <i>The New York Times
,</i> Oracle CEO
Larry Ellison termed the HP board's 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 hadn't come back
and saved them."
It should be mentioned that Ellison and Hurd are said to be good friends.
"In losing Mark Hurd, the HP board failed to act in the best interest
of HP's employees, shareholders, customers and partners," added Ellison,
who said the HP board was 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."
Hurd's severance package was apparently substantial, leaving little doubt
that he'll survive this fall from grace. Analysts also believe HP will pull
through the scandal quickly-but continues to face long-term
"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 IBM's
In order words, Gottheil wrote, "despite its success under Hurd, TBR
believes the company will weather its CEO
transition." The future CEO's
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. HP's entrance into the
portable-device market, via its Palm acquisition, also raises its competitive
profile vis-??Ã-vis Apple.