Analysts: Hurd likely to keep HP whole

Mark Hurd

From NCR, Hurd has experience in selling a diverse set of business hardware and software products, including automated teller machines, databases and sales applications, analysts said.

HP's board has picked Hurd as the company's new president and chief executive.

Rather than break up the company into different entities, HP's board has made clear it favors a "portfolio" approach, in which the tech giant offers a full suite of products to different customer sets, according to some analysts.

"If they picked somebody who's got a background of selling off or breaking up companies--Michael Capellas has done that twice, for example--(it) would indicate that a breakup was likely," Frank Gillett, an analyst at Forrester Research, said.

Hurd faces significant challenges in his new post, not the least of which is running a company of HP's size. The printing and imaging business at HP alone last year had roughly four times the revenue of NCR. Overall, NCR made $6 billion last year, while HP pulled in nearly $80 billion.

Hurd "has to scale up whatever he knows from NCR to a much bigger playing field," said Roger Kay, an analyst at IDC.

Strength in diversity?
The incoming CEO will also have the ongoing challenge of directing a company undergoing a lot of change, in the face of intense competition from Dell and IBM.

"It's a strategic challenge," said Chris Foster, an 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."

Indeed, Gillett said that HP has yet to prove that its diversified portfolio strategy will pay off, something that won't become clear for another six months or a year.

"I think somebody at NCR is interesting, because of the diverse operational experience," Gillett said. "But note that there is no consumer stuff and note that the scale is completely different."

"That said, they were never going to find someone who was going to meet all the requirements," he added. "You're not going to find someone with all the bits. So you look for the best available mix."

The ideal candidate would have had experience running a company HP's size with a diverse product line serving both business and consumer customers.

Despite HP's stated strategy of keeping its units integrated, IDC's Kay said that the Palo Alto, Calif.-based company could still revisit whether to spin off its PC business.

Way ahead
Before running all of NCR, Hurd used to head up the company's Teradata division, which sells software for building large data warehouses for analyzing company information. NCR's Teradata unit has performed better than all the major competitors in the overall database market, growing at nearly 20 percent from 2003 to last year, according to IDC.

One NCR analyst said big changes are in store for HP, as Hurd will likely take the same approach he had while at NCR.

"Some people say all he did was cut costs, but that's not true," said Jeff Embersits, an analyst at Shareholder Value Management. "He did a good job of restructuring the business--changing senior managers to get more competent people to work at NCR--and corrected their strategy."

After being named chief executive at NCR, Hurd began to institute changes almost immediately, Embersits said.

"With NCR, you had a company that ran poorly for three or five years, but within nine months, you had a sense of what Mark could do," Embersits said. "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."

CNET News.com's Dawn Kawamoto contributed to this report.