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HP names NCR leader as new chief executive

Hewlett-Packard selects Mark Hurd, NCR's chief executive, as its next CEO, according to a source close to the board.

Hewlett-Packard has selected Mark Hurd, NCR chief executive, as its next CEO, according to a source close to the board.

Mark Hurd

Hurd's appointment comes less than two months after HP ousted former chief executive Carly Fiorina.

Hurd will serve as president and chief executive, with Patricia Dunn retaining the chairwoman title, the source said. Hurd is expected to begin his new duties early next month.

"He has done an astonishing job at NCR and had inherited similar problems" to those at HP, the source said. "NCR sells into retail and enterprise markets, and has the same complexities."

HP representatives were not immediately available to comment on Hurd's appointment. NCR issued a statement Tuesday that Hurd was resigning to take "a position with a large global technology company." His resignation is effective immediately.

"I'm very proud of what NCR has achieved during my tenure as CEO, and I'm confident that with the company's leading technologies and attractive markets, coupled with the management team's focus on execution, the momentum will continue," Hurd said in a statement.

James Ringler, an NCR board member, will serve as interim CEO while the company searches for a replacement.

During the search, Hurd emerged as a clear frontrunner within the first month of the effort, the source said.

And though the search ended quickly, Hurd 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, the source noted.

Nonetheless, he made a favorable impression on this go-round. "He's young, he has a fabulous record, he understands the industry, he's tough and recruits good people," the source said.

Hurd, 48, initially joined NCR in 1980 and rose up the ranks. He 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 revenues 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. NCR's stock closed at $37.90 a share during the regular trading session Monday, compared with $9.06 a share, split-adjusted, when Hurd took the CEO post.

"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 at 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 later, 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 that he was "sandbagging" Wall Street, Embersits said. But once the bulk of the turnaround 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, 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."

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

Shares of HP rose $1.15, or 5.81 percent, to $20.94 a share in morning trading.

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