Mark Hurd's Exit Hurts HP: 10 Reasons Why

 
 
By Don Reisinger  |  Posted 2010-08-09 Email Print this article Print
 
 
 
 
 
 
 

News Analysis: Mark Hurd is out as Hewlett-Packard's CEO, and now the company needs to rebuild. But how will his departure affect HP's ability to stay atop the PC market?

In a shocking development on Aug. 6, Hewlett Packard announced that its CEO, Mark Hurd, had left HP over investigative findings that he had violated HP's standards of business conduct. The investigation was launched after claims of sexual harassment were made by a former HP contractor. Hurd was quick to point out that the investigation made it clear to him that he would have difficulty being "an effective leader at HP." The company made its chief financial officer, Cathie Lesjak, interim CEO.

Hurd's departure from HP could spell trouble for the venerable company. Although it is enjoying success, much of that is due to Hurd's leadership. And with its Palm plans still in their infancy, it's not unreasonable to question whether the company's next leader will have the same vision as Hurd. Simply put, there are some major question marks at HP, and the longer they remain unresolved, the more it will hurt the tech company.

Here, eWEEK takes a look at how Hurd's departure will hurt HP.

1. It's an investment game

Make no mistake: The goal of any major tech company is to maximize shareholder value. The only way to do that is to reduce expenses, increase revenues and ultimately see profits soar. When a CEO who has done as good a job as Hurd leaves, shareholders tend to get worried. And when that happens, they usually start selling off shares for fear of the next CEO ruining things. Everything might be fine in the beginning, but the longer it takes HP to overcome the hurdle of Hurd's departure, the harder it will be to attract shareholders.

2. Hurd turned things around

Let's not forget that Mark Hurd was integral to the success of HP over the last five years. When Hurd took over from Carly Fiorina, HP was a shadow of its former self. Just about everything was going poorly for the company. Hurd worked hard to give the company a new vision. He also revamped its computing division to give it a better focus. He made HP an unbridled success: the world's top PC manufacturer, as well as a major player in the enterprise. Now that he's gone, stakeholders need to start hoping that someone else can maintain that same level of success.

3. What will become of Palm?

When HP acquired Palm earlier in 2010 for $1.2 billion, there was speculation as to how it would help the company. With Hurd at the helm, most folks believed that he would capitalize on Palm's past success and generally improve HP's software portfolio through the use of WebOS. But now Hurd is gone, and the key decision maker that decided Palm's fate isn't there to lead it into the next decade. Will the new leader utilize WebOS and revamp the Palm product line? Will HP lose its way in the mobile market? Without Hurd, the latter possibility seems more likely than ever.

4. Acer's opportunity

As Acer continues its trek to become the world's top PC maker, maybe Hurd's departure is exactly what the company needed to finally take that crown. For a while now, HP has been able to keep Acer at bay, mainly through its ability to attract corporate customers. But with Hurd out and HP in confusion, Acer can take advantage of the situation. With the right strategies and a focus on value, Acer might not have much trouble taking over the PC business.

5. Tech strategists are needed

When HP announced that its CFO was taking over the company until a suitable replacement for Hurd could be found, some who follow the tech world cringed. Lesjak might be a financial wizard, but Hurd's value to HP was his ability to see the tech space for what it is and capitalize. As a CFO, it's unlikely that Lesjak has that ability. The longer HP takes to find a replacement who has the kind of understanding of the industry that Hurd had, the worse it will be for the PC maker. CFOs are great, but they aren't ideal in the CEO's chair-especially in the tech industry.



 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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