HP’S NEW CEO MARK HURD
HP’S NEW CEO MARK HURD
2005-03-31 at 10:24:00 am #11191
HP Hopes Hurd’s Low-Key Style Aids
SAN JOSE, Calif. 3 05 -
Hewlett-Packard Co. is hoping its choice of a relatively obscure, Midwestern
management expert to replace the flamboyant Carly Fiorina as president and CEO
will be enough to turnaround the struggling computer company.
Mark Hurd, 48, a 25-year
veteran with computer services company NCR Corp., will take charge at HP on
Friday. Business experts praised the appointment, which some said was a blatant
indictment of Fiorina’s aggressive management style.
“Mark is a complete, 180-degree turnabout from Carly,
and very low-key,” said Jeffrey Alan Sonnenfeld, associate dean of the Yale
School of Management. “I like that he’s not an opportunistic job hopper – he
hasn’t been out shopping himself around.”
HP’s long-stagnant stock jumped more than 10 percent
Tuesday when Hurd confirmed that he’d take the job. HP shares closed Tuesday at
$21.78 on the New York Stock Exchange, up $1.99, or 10 percent.
“HP is one of the world’s great
companies, with a proud history of innovation, outstanding talent and enviable
positions in many of its product lines and services,” Hurd said Tuesday in a
statement. “It’s a great honor to join its leadership team and have the
opportunity to build on its success.”Hurd joined Dayton, Ohio-based
NCR, a computer services company best known for its ATM machines, in 1980 and
quietly spearheaded an ambitious turnaround when he became CEO in March 2003.
Hurd – the antithesis of the
celebrity CEO – is a sharp contrast to Fiorina. She was one of the country’s
most powerful female executives, a media-savvy marketing specialist who was
fired for not slashing costs or boosting profit quickly after HP’s merger with
Compaq Computer Corp. in 2002.Fiorina, lured to HP in July 1999
from Lucent Technologies Inc., is best known for orchestrating the Compaq
acquisition – a $19 billion deal that required her and Compaq boss Michael
Capellas to overcome fierce resistance among employees and HP director Walter
Hewlett. Fiorina effectively silenced Hewlett, son of an HP co-founder, but she
gained a reputation as a ruthless executive in the process.
In August, her cutthroat image
was sharpened when she fired three other senior executives and blamed them when
an HP division reported a $208 million third-quarter operating loss.
Hurd, by contrast, is known for
working quietly and closely with fellow executives – including the previous CEO,
who helped Hurd formulate a turnaround strategy for the company. Hurd isn’t well
known on Wall Street or in the financial media but enjoys a solid a reputation
among business experts as a relentless cost-cutter familiar with nearly every
facet of management.HP director Patricia C. Dunn, who
headed the executive search committee, said Hurd’s no-nonsense style appealed to
the board. While Fiorina frequently wooed Wall Street investors and lunched with
politicians in Washington, D.C., Hurd is likely to spend long hours on HP’s Palo
Alto campus and at company offices worldwide.“Mark is an operator and likes
to roll up his sleeves and work with his team and his customers and spend time
with employees,” Dunn said in a phone interview Tuesday afternoon. “To the
extent he feels it’s appropriate to be visible, he will be – but he focuses on
getting the job done.”At HP, Hurd will receive a
signing bonus of $2 million and earn an annual base salary of $1.4 million,
according to a regulatory filing late Tuesday. He could earn substantially more
under various short- and long-term incentive programs, the document said.
On his first day on the job, Hurd
also will be granted a stock option to purchase 700,000 shares that will vest at
a rate of 25 percent a year, starting on his first anniversary with HP. He also
will be granted additional options and restricted stock to compensate for NCR
shares he forfeited when he left that company.NCR, located far from Silicon
Valley’s venture capitalists and technology power brokers, operates data
warehouses that store countless bits of information from corporate customers.
The company also sells “relationship management” software that helps companies
keep track of customers and their orders.Before he took the helm of NCR,
Hurd was president and chief operating officer. In 1999, he led NCR’s lucrative
Teradata warehouse division and before that he held jobs in marketing,
professional services and sales.Born in New York City, Hurd
attended Baylor University in Texas on a tennis scholarship and rose to be the
No. 1 player on the team. He graduated with a business degree, and after an
attempt at professional tennis, joined NCR in 1980 selling computers in Texas.
Hurd significantly boosted NCR’s
presence in China.The company employs more than
1,000 workers there and has an ATM factory in Beijing. As head of NCR, he spent
about half his working hours in Beijing or Europe.When in Dayton, he could be seen
in his office from about 8 a.m. until 7 p.m. He’d usually go home to eat dinner
with his wife and two daughters, then put in two more hours of work before bed.
Despite his lack of recognition,
Hurd has consistently won praise from NCR board members, who rewarded him with a
generous compensation package for his relatively speedy reversal of NCR’s
fortunes.Since Hurd took over the
28,000-employee company, NCR’s net income has jumped to $285 million from $58
million in 2003.In a letter to shareholders in
NCR’s 2004 annual report, Hurd said the company has reduced costs $200 million
since 2003, and he expected to cut another $150 million in the next two years.
Hurd’s total compensation jumped
33 percent last year to $2.02 million, according to a proxy statement filed last
week with the Securities and Exchange Commission. Hurd received $899,423 in
salary and $1.12 million in bonuses.Since Hurd took the helm, NCR’s
stock has climbed 332 percent – a stark contrast to HP’s flagging shares. Five
years ago, HP shares traded at nearly $70 per share.But Hurd’s management style may
not be enough to transform HP, a 151,000-employee company that’s struggled to
sell hardware as efficiently as low-cost rival Dell Inc.“If anyone is qualified, he
is,” said Peter Morici, a business professor at the University of Maryland.
“The question is whether he’s taking over the equivalent of the Detroit Lions –
an enterprise that’s so financially damaged and whose portfolio is so limited as
to what the world wants that no one can do it.Increasingly, technology
companies are becoming commoditized, so he’s going to have a hard time finding
market niches that really add value.‘‘