A previous article I posted speculated that Hurd will change HP's strategy
and possibly break it up, this NY Times article says otherwise
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March 30, 2005
A Break With Style, Not With Strategy
By JOHN MARKOFF

SAN FRANCISCO, March 29 - Hewlett-Packard once went for flamboyance and
style with Carleton S. Fiorina, the chairwoman and chief executive who was
fired in February.

On Tuesday, the company chose to return to its traditional low-key
management approach in naming Mark V. Hurd, the little-known president and
chief executive of NCR, a maker of computers and automated teller machines,
to succeed Ms. Fiorina.

The appointment of Mr. Hurd, who led a turnaround at NCR through
operational improvements and cost-cutting, underscores the Hewlett-Packard
board's commitment to a growth strategy led by an expansion into consumer
electronics.

Wall Street was enthusiastic about the choice of Mr. Hurd, 48, as a
steadying influence to lead Hewlett-Packard, which experienced
disappointing profits in the last four years. Its shares rose $1.99, or 10
percent, to close at $21.78 on Tuesday, though a formal announcement of the
appointment was not made until after the markets closed.

The chairwoman of Hewlett-Packard, Patricia C. Dunn, said that the
appointment of Mr. Hurd was a strong statement that the company did not
intend to unravel its merger with Compaq or sell off other major pieces of
its business.

Rather, Mr. Hurd is seen as an executive who can bring discipline and order
to the diverse portfolio of businesses that includes personal computers,
corporate servers, printers, cameras, software and corporate services. In
dismissing Ms. Fiorina, the board said it was not interested in changing
its strategy of offering a full range of digital products to consumers and
businesses. Ms. Fiorina, who was considered a high-profile marketing
wizard, was unable to increase the company's profitability despite its $19
billion acquisition of Compaq in 2002.

"H.P.'s directors chose wisely," said C. K. Prahalad, who is a member of
the NCR board and a professor at the University of Michigan business
school. Mr. Hurd, who spent 25 years at NCR, has deep knowledge in the
details of running a business and is a good motivator of people, Mr.
Prahalad said.

The challenges Mr. Hurd now faces are substantial. Hewlett-Packard, based
in Palo Alto, Calif., is in fierce competition with I.B.M. in the market
for corporate information technology services. It is also in a bruising
fight with Dell Computer in the PC market and increasingly in the printing
business, one that Hewlett-Packard has long dominated.

"There is a lot of strategic challenge here, and there are lots of moving
parts," said George Colony, president of Forrester Research, a computer
industry consulting and market research firm based in Cambridge, Mass.

Ms. Dunn said the board believed that the company had the right mix of
businesses and had chosen Mr. Hurd precisely because it believed he was the
best candidate to carry out the company's strategy.

"We were looking for someone who could run these businesses," she said.
"Our strategy is to execute, and Mark is very strong and execution-oriented."

Ms. Dunn, who led a three-member screening committee with the directors Jay
Keyworth and Thomas Perkins, said the selection process had taken seven weeks.

The company initially considered a large number of candidates with the
assistance of Russell Reynolds, a New York-based executive recruiting
company, she said. After that initial selection, the board committee then
talked to dozens of potential candidates. The entire board interviewed a
recommended "set of finalists," she said.

Even though NCR is a much smaller company than Hewlett-Packard, she said
one factor in Mr. Hurd's favor was his experience with a mix of businesses
in some ways similar to those of Hewlett-Packard's.

"It turns out that NCR does have a retail business," Ms. Dunn said. "Though
NCR is much smaller in revenue than H.P., it is not much different in
complexity."

Several executives, including Ms. Dunn, said that Mr. Hurd would be a
strong match with the company's traditional culture, which has been both
collaborative and low key.

"He's down to earth and he's a roll-up-your sleeves type," Ms. Dunn said,
"and he's a driver."

The choice of Mr. Hurd is considered by many as a way to ease the internal
crisis that preceded Ms. Fiorina's ouster.

Ms. Fiorina arrived at Hewlett-Packard in 1999 and was the architect of the
merger with Compaq. She presided over cost-cutting and a structural
overhaul, and pushed revenue to $80 billion in 2004 from $47.2 billion in
1998, but was never able to generate the kind of profit needed to please
Wall Street investors.

Under Ms. Fiorina, Hewlett-Packard shares peaked in August 2000 at $55.98
before declining to $21.39 at the time of her departure last month.

Late last year, as it became increasingly obvious that the Compaq merger
would not generate significant financial growth, the board pressed her to
give up some control and to bring in a chief operating officer. When Ms.
Fiorina resisted the challenges to her authority, it precipitated a
confrontation and she was forced to step down.

A number of analysts said that despite the challenges facing the company,
the competitive situation was not impossible if the company was well run.

"There is tremendous upside for somebody able to come in and focus on
operations," said T. Michael Nevens, the former director of the McKinsey &
Company practice in Silicon Valley. "What they need is someone who is able
to make hard choices on businesses and people and where to invest."

Whether Mr. Hurd is able to turn around Hewlett-Packard, he will receive a
handsome compensation package.

The details of his package, which were filed on Tuesday with the Securities
and Exchange Commission, include a base salary of $1.4 million in addition
to bonuses of up to $2.8 million for meeting performance goals.

Other incentives, including 700,000 stock options, raise the value of his
compensation package to more than $12 million. He will also be compensated
for income forfeited upon leaving NCR, with the amount between $15.4
million and $21.9 million.

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