HP Rolls Out Its New CEO
Fresh out of college, Mark Hurd tried his hand at professional tennis -- a brief career distinguished by his tendency to attack the net.
Hurd, 48, is likely to draw on that competitive spirit in his new racket as chief executive of Hewlett-Packard Co. His charge: Sharpen the sprawling computer and printer maker’s focus to better challenge rivals such as Dell Inc. and IBM Corp.
“He likes to compete,” said Jeff Embersits, an analyst with Shareholder Value Management who watched Hurd turn around NCR Corp. as CEO there. “He doesn’t like to lose.”
A day after being named to the top spot at Palo Alto-based HP, Hurd on Wednesday spoke at a congenial, low-key news conference, projecting an image that contrasted with that of Carly Fiorina, the high-profile former CEO whose ouster was announced Feb. 9.
The legendary Silicon Valley company, Hurd said, is “not performing to its potential,” a fact underscored by shrinking margins and slowing growth rates. But, he added, “I don’t think you’ll find me doing anything tricky.”
At least not yet. Analysts agreed that it would require something tricky to streamline HP’s operations, find common ground in its varied product lines and stand up to relentless competition from hyper-efficient Dell.
HP’s personal computer and computer server market is cooling off this year, with growth slowing to around 10% from around 15% last year. Data storage is losing market share, and profitability is elusive for HP’s enterprise business, which sells to the corporate and government market. Even HP’s imaging and printing business, which brings in about 80% of the company’s profit, is slowing and seeing profit margins decline.
The problems have led some analysts and investors to call on HP to spin off the imaging and printing business into a separate company, a strategy rejected at least three times by directors.
Quizzed repeatedly by financial analysts and reporters on that subject, Hurd said he had no plans to break up HP -- but acknowledged that anything could happen down the road.
Hurd stressed that he wouldn’t officially start work until Friday and that he was still learning about the company and so wouldn’t articulate any strategy for a while. He described himself as a team player who wants to be able to mingle easily with colleagues.
“I like to have a team environment where I can go anywhere and not threaten management,” said Hurd, who was sought out because of his reputation as a hands-on manager with skillful strategy execution.
“He seems very dedicated to operations,” said Shane Robison, HP’s chief strategy and technology officer, who met Hurd for the first time Wednesday morning. “He’s really focused on understanding the metrics of how the different business models work.”
Other HP executives said the married father of two was expected to follow HP’s “MBWA” practice: “management by walking around,” popularized by company founders Bill Hewlett and David Packard.
“He gets down into the organization,” said Chief Marketing Officer Mike Winkler. “He’s not a hierarchical person; he’s a very horizontal person.”
Analysts noted that NCR, although a much smaller company with revenue last year of $6 billion, compared with HP’s $80 billion, was similar to HP in that it was a global technology corporation with five business divisions.
“He should be a good cultural fit for HP,” said Merrill Lynch analyst Steven Milunovich in a note to investors. “He is a blue-collar CEO, more interested in rolling up his sleeves to solve problems than appearing in front of cameras.”
Fiorina, who was forced out by the board last month for failing to deliver promised profit from HP’s $19-billion acquisition of Compaq Computer Corp., frequently took the stage with Hollywood and music stars and schmoozed with politicians and world leaders.
On Wednesday, Hurd sat on a high stool in a dark suit between Patricia Dunn, the nonexecutive chairwoman of the board, and Chief Financial Officer Robert Wayman, who had served as interim CEO after Fiorina’s exit.
Hurd earned respect from engineers at NCR, unusual for a CEO without a technical background, said Mark Stahlman, an analyst at brokerage firm Caris & Co. “That will potentially bode well for working at what is still very much an engineering culture at HP.”
Hurd rose to the top relatively quickly at NCR, where he was considered a quick study and a skillful manager. At NCR, he changed the landscape of the automated teller machine industry, re-engineering NCR’s ATM product family from more than 30 models down to around 10.
He also led the data storage and analysis business known as Teradata, “which is now the de facto standard for data warehousing,” Shareholder Value’s Embersits said. “IBM can’t even compete.”
At least one analyst said Hurd’s hiring “has the earmarks of a brilliant move” -- because Hurd was unlikely to stay more than five years, allowing HP to groom Vyomesh “V.J.” Joshi, executive vice president of the Imaging and Personal Systems Group, to be eventual CEO.
Joshi “is clearly on a fast track for the top job,” said Rob Enderle, principal analyst at Enderle Group.
“Hurd’s tenure should be no less than three years but no more than five, allowing for the critical time necessary to groom V.J. for the job and for V.J. to groom his successor,” Enderle said. “V.J. is very well regarded in and outside of the firm, so his clear position as heir also will help internal morale and external relationships.”
Neither Hurd nor Dunn would answer questions about executive and strategic timetables, and other analysts said they thought Hurd would be there significantly longer.
“I do think he’s there for the long haul,” said Stahlman, who did not think there was a risk of Joshi leaving the company.
Joshi’s division encompasses what HP has described as its big growth opportunity: rich digital media, or the infrastructure to produce, store, distribute and view or listen to audio and video content.
“My sense of V.J. is that he’s very committed at this point,” Stahlman said. “He’s got the sweet spot at HP; he’s got the living room.”
On Wednesday, HP shares rose 22 cents to $22 on the New York Stock Exchange, continuing a rise that began Tuesday before Hurd’s appointment was announced.
(BEGIN TEXT OF INFOBOX)
Name: Mark Hurd
Career: Joined NCR in 1980, became president in 2001, chief operating officer in 2002, CEO in 2003.
Education: Bachelor’s degree in business administration, Baylor University, 1979
Book: Coauthor, with Lars Nyberg, of “The Value Factor: How Global Leaders Use Information for Growth and Competitive Advantage,” ranked No. 74 on Amazon’s bestseller list
Source: Times research
Los Angeles Times