Hurd signs on as new HP chief

Mark Hurd

Hurd's appointment comes less than two months after HP ousted its former chief executive, Carly Fiorina, and as the industry icon struggles to execute on all cylinders after its megamerger with Compaq.

As earlier reported, Hurd will serve as president and chief executive, with Patricia Dunn retaining the chairwoman title. Hurd will begin in his new post Friday and will join the HP board.

"Mark came to our attention because of his strong execution skills, his proven ability to lead top performing teams and his track record in driving shareholder value," Dunn said. "He demonstrated these skills by turning around NCR, which, while smaller than HP, is a complex organization with multiple business segments."

Dunn also noted: "As we got to know Mark, we were impressed by his emphasis on developing internal talent while reaching outside for new skills, his understanding of the role of culture in a company's success and his personal integrity."

The issue of a cultural fit was one that plagued the Fiorina era. The charismatic executive was accused by a number of employees of killing "the HP way," and was publicly chided during a shareholder meeting by current and former HP employees.

During the search, Hurd emerged as a clear frontrunner within the first month of the effort even though he was not well-known to HP prior to its CEO search. He was not among the candidates reviewed when HP selected Fiorina six years ago.

Three HP board members--Dunn, Jay Keyworth and Tom Perkins--screened a broad field of candidates before submitting the strongest candidates to the full board for their review and selection.

Hurd said he's ready for the challenge of running the larger company, building on a foundation of HP's traditions and current status.

"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.

James Ringler, an NCR board member, will serve as interim chief executive at NCR while the company searches for a replacement. At HP, Robert Wayman steps down as acting CEO but remains chief financial officer and a member of the board.

Hurd, 48, initially joined NCR in 1980 and rose up the ranks. He has worked as a senior sales and marketing executive and later as the chief operating officer. In March 2003, Hurd was named CEO.

The company, which last year generated $5.98 billion in revenue, provides software, hardware and services for automated teller machines, data warehousing and IT services.

In the fourth quarter, NCR posted revenue of $1.79 billion, a 9 percent increase over the previous year. And the company

generated fourth-quarter net income of $124 million, up from $80 million. NCR's stock has risen threefold since Hurd was named chief.

Analysts have applauded Hurd's performance since he took NCR's helm two years ago. Although NCR's stock closed at $31.40 a share during the regular trading session Tuesday, or down 17 percent, it is still substantially up from $9.06 a share, split-adjusted, when Hurd took the CEO post two years ago.

"With NCR, you had a company that was run poorly for three or five years, but within nine months, you had a sense of what Mark could do," said Jeff Embersits, an analyst with Shareholder Value Management. "He has a broad skill set and he'll go into HP and correct the strategy, product, management and costs--and probably in that order."

Although Hurd may change the lineup of HP's management and tinker with its strategy within the first nine months, the effects from these structural changes may not be felt until 12 to 18 months, Embersits estimated.

During his tenure as NCR chief executive, the company has pre-announced higher-than-expected earnings for eight consecutive quarters--prompting some analysts to joke he was "sandbagging" Wall Street, Embersits said. But once the bulk of the turn around was completed, Hurd's NCR financial projections were roughly 95 percent in line with Wall Street's estimates, he added.

That's in contrast to HP's track record under Fiorina, in which the company issued several sizable warnings that its earnings would fall short of analysts' expectations.

Although Hurd has a track record of quickly implementing change at NCR while sitting in the CEO chair, the speed at which he works at HP may be less dramatic. Hurd had the advantage of spending more than 20 years at NCR before assuming the CEO role, so he was intimately familiar with the company.

He will also face the challenge of running a company that has revenues 10 times larger than NCR, as well as encountering intense competition from Dell and IBM while instituting change.

"It's a strategic challenge," said Chris Foster, analyst at Technology Business Research. "It's transforming this company from its hardware roots, and the Compaq hardware roots as well, into a software-and-services company that can execute. The future of tech is not in the PC and it's not in servers. It's getting to the level where they're more like IBM, where software and services drive the company."

Still, investors reacted swiftly to the newsof Hurd's departure: NCR stock fell more than 10 percent in morning trading Tuesday, to $33.81 a share.

Shares of HP rose $1.99, or roughly 10 percent, to end the regular trading session at $21.78 a share.