From today's Globe and Mail:
http://www.theglobeandmail.com/servlet/story/RTGAM.20060208.gtrhp08/BNStory/Technology/
NEW YORK - After the splashy appearances of his high-profile predecessor Carly Fiorina, Hewlett-Packard Co. chief executive officer Mark Hurd created his own buzz at last month's Consumer Electronics Show in Las Vegas -- by not showing up.
The message couldn't have been clearer.
After six years with a celebrity CEO at the helm, Hewlett-Packard is now in the hands of a no-frills executive, who focuses like a laser on executing the company's business plan in a challenging, rapidly changing technology market.
Last year, Ms. Fiorina, flanked by stars Matt Damon and Gwen Stefani, had dazzled the gadget-happy conference by pledging to plow ahead with production of a digital entertainment hub that would merge the functions of a television, personal computer, stereo and other entertainment devices.
Five weeks later, a year ago tomorrow, the HP board ousted her amid a noisy campaign from investors who were unhappy with HP's erratic earnings performance and underperforming stock.
Mr. Hurd, who came to HP 10 months ago after turning around NCR Corp., is already winning kudos from Wall Street, in spite of some nagging concerns about the growth trajectory that he has outlined for the company.
He has not ushered in a startling new strategic vision, or spun off the personal computer division as some analysts had urged. But he has provided a sense of operational competence that critics -- and ultimately the board -- felt was missing in Ms. Fiorina.
"Carly knew where she was going; she didn't know how to get there," said Rob Enderle, an industry analyst and consultant.
"Because they now have an executive that knows where he is going and how to get there, morale is up; HP is better able to execute, and the analysts are much more comfortable because it doesn't sound like somebody is trying to pull the wool over their eyes."
Critics argue that Ms. Fiorina had fumbled the $25-billion (U.S.) acquisition of Compaq Computer Corp. by failing to manage the integration of the two giants.
In his first year on the job, Mr. Hurd has launched a restructuring program that will eliminate 15,300 jobs and shave $2-billion in costs by 2007, reorganized the operating divisions to give more authority and responsibility to managers, and begun the mammoth task of retooling HP's own information technology to drive down costs, improve its functioning and make it a showcase for HP products and services.
He has also cancelled some of the higher-profile, lower-return ventures approved by Ms. Fiorina, including a digital entertainment hub that she unveiled at last year's Consumer Electronic Show and a project to marry HP technology with Apple Computer Inc.'s wildly successful iPod.
Happily for him, his arrival coincided with an uptick in HP's fortunes, and he is the first to admit that some of the improvement is the result of initiatives that were under way before he was hired.
Company profit and revenue have exceeded analysts' expectations in the past few quarters, while rival Dell Inc. has disappointed. HP's stock price, which had underperformed both Dell's and International Business Machines Corp.'s for years, has climbed 70 per cent since this time last year when the board was facing an investor revolt.
While Mr. Hurd is eager to share the spotlight and the credit, the 49-year-old New York City native does not undervalue his own worth. He arrived at HP's Palo Alto, Calif., headquarters with a "golden hello" worth an estimated $20-million.
HP is a global giant. With sales of nearly $87-billion last year, it ranked 11th on Fortune magazine's list of the world's largest companies by revenue for 2004, with 151,000 employees in 178 countries.
Although hardly a hermit, Mr. Hurd kept a low profile throughout 2005 as he worked with a senior management team to redefine HP's business strategy.
His "coming out" party came just before Christmas when he spoke at the company's annual meeting with financial and technology analysts.
He told the analysts that, when he came to HP last March, he found a company that had a strong corporate culture, dedicated though somewhat demoralized employees, and an impressive array of technologies. But he also found a fractured organization that had little accountability and an uncertain grasp of risk and return in its various product lines.
At the analyst meeting, he cited three major trends: The move among enterprises from large monolithic mainframe servers to distributed computing power; the evolution of mobile computing among businesses and consumers; and the rapid development of digital printing. Those developments "play to HP's strengths," he told the meeting. "These three market movements, we think we're positioned to capture."
Still, neither he nor his chief financial officer, Robert Wayman, offered any promise for rapidly escalating revenue or profit growth -- a fact that was noted with disappointment by the analysts and that precipitated a short-lived selloff in HP shares.
Revenue for 2007 could be expected to grow between 4 and 6 per cent, the HP executives said, while operating margins would be in the 7.5- to 8-per-cent range. Neither figure represents a significant improvement on recent history.
Charles Wolf, an analyst with Needham & Company LLC, said Mr. Hurd's pre-Christmas revenue projections were "very disappointing.
"You can cut costs for a while but at some point you have to start growing revenues," Mr. Wolf said.
Shane Robison, the company's chief strategy officer who joined HP from Compaq, said in an interview that the new chief executive officer signalled he would not shrink from hard decisions. But he only comes to that point after careful consideration with his management team.
One example: After a thorough analysis, Mr. Hurd approved an expensive plan to overhaul the company's own outdated information technology system.
The plan will reduce the current roster of 85 data centres in 29 countries to just six.
The investment, the CEO told analysts, will not only reduce costs, but will improve HP's own data analysis and provide customers a showcase for leading-edge technology.
Despite the progress, many observers are withholding judgment on Mr. Hurd, perhaps mindful of the early enthusiasm that greeted Ms. Fiorina's tenure.
Mr. Enderle said Mr. Hurd faces major challenges as HP struggles to gain a bigger share in markets that are dominated by a few fiercely competitive players.
"It's not going to be a walk in the park for him," the analyst said. "They're still dealing with a very complex company with a substantial amount of bureaucracy. You've got major players who continue to refine their own models and run at HP. It's going to be an exciting time."
The tale of two CEOs
What she did
As CEO, Carly Fiorina led HP's 2002 purchase of Compaq Computer Corp. against the protest of many shareholders and founding family members.
z Cut expenses by $3-billion (U.S.)
z Presided over a 55% drop in share price.
What he did
CEO Mark Hurd has spent much of his first year undoing Ms. Fiorina's work. His restructuring program will eliminate 15,300 jobs and shave $2-billion in costs by 2007.
z Cancelled low-return, high-profile projects.
z Saw stock rise 70% since his arrival.
July 19, 1999
HP names Ms. Fiorina as chief executive officer.
Sept. 3, 2001
HP's decision to buy Compaq for about $24-billion (U.S.) is announced.
Feb. 9, 2005
Ms. Fiorina resigns in a dispute with HP's board. Stock rises 7%.
SOURCE: BLOOMBERG
***
Carly Fiorina
Reputation: Celebrity female CEO
Claim to fame: Oversaw Hewlett-Packard's controversial acquisition of Compaq Computer Corp.; First woman to head a major technology company.
Leadership style: Jetsetter; bought two Gulfstream corporate jets while the company was in the midst of layoffs
On the stage: Showed up at the 2005 Consumer Electronics Show with Matt Damon and Gwen Stefani; sought the spotlight as the personification of Hewlett-Packard.
Accolades: Fortune magazine's most powerful woman in business six years running.
Trademark Quote: "The goal is to transform data into information, and information into insight."
Career Path: Started at AT&T in sales, worked her way up through its systems division, went with Lucent Technologies when AT&T spun it off, became president of Lucent in 1998, joined Hewlett-Packard as president and chief executive officer in 1999.
Schooling: Bachelor in medieval history and philosophy, Stanford University; MBA, University of Maryland; MBS in Management, Sloan School, Massachusetts Institute of Technology
***
Mark Hurd
Reputation: Boring operations guy
Claim to fame: Drove efficiency gains at NCR Corp. that resulted in a fivefold increase in operating profit.
Leadership style: Laser-like focus on execution; announced 15,500 in job cuts at HP within months of taking over.
On the stage: Did not attend the 2006 Consumer Electronics Show; shares the spotlight with senior mangers to demonstrate new "accountability."
Accolades: Investors sold off NCR shares, sending them 12.7 per cent lower, on news he was leaving the company.
Trademark Quote: "You want to go to where the puck is going, not to where it's been."
Career Path: Joined NCR as a salesman, moved through the ranks of management, including a period as head of its Teradata data-warehousing division; named president of NCR in 2001, and chief executive officer in 2003; became HP's CEO in March, 2005
Schooling: Bachelor in business administration, Baylor University
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