HP will ride Hurd resignation storm

Hewlett-Packard will have no difficulty riding out the storm after CEO Mark Hurd's sudden resignation and should now focus on reassuring customers on its ability to operate during this interim period, according to an analyst.

Hewlett-Packard will have no difficulty riding out the storm after CEO Mark Hurd's sudden resignation and should now focus on reassuring customers on its ability to operate during this interim period, according to an analyst.

In an email interview with ZDNet Australia's sister site ZDNet Asia, US-based John Madden, research director of IT services at Ovum, noted that with the talent in HP's top management, the IT vendor will have no difficulty riding out the change while it waits for the appointment of a new CEO.

During this transition period, Madden said the publicly-traded company will have to reassure its customers it will continue to deliver and function successfully and effectively.

In an Ovum statement released on Friday, Madden noted that the company can tap on its pool of IT partners and alliances, especially Oracle, SAP and Microsoft, which can "be particularly helpful in getting out that message to the market, given their many large, joint global customers".

In an email response to ZDNet Asia on whether the leadership vacancy will impact its Asia-Pacific operations, HP said: "No further changes have been announced and we're focused on running the business."

Hurd resigned on 6 August over a sexual harassment scandal in which he was alleged to have misreported company expenses to shield a relationship with a former marketing contractor.

He was replaced by the company's CFO Cathie Lesjak who has stepped in as interim CEO, which Madden said is a "smart move".

"Lesjak has been with the company a long time and will provide a sense of stability while the company's search committee does its job," said the Ovum analyst.

He added that one of the many things Hurd did well during his tenure was his plans to "streamline operations for greater cost efficiency". During his term, the company managed to add US$45 billion to its stock market value, which hit US$108 billion.

However, these efforts had also resulted in a change of corporate culture, he noted. In the past several years, the "HP Way" had been more synonymous with cost-cutting than anything else, Madden said. First established by founders Bill Hewlett and David Packard, the HP Way focused on employee loyalty to drive company success.

Customer unrest over cost-cutting

There was also unrest among HP's enterprise clientele. Madden told ZDNet Asia that prior to Hurd's departure, customers were questioning the company's ability to deliver in the long term with its constant cost-cutting and reorganisation brought on by its multiple acquisitions.

HP acquired EDS, 3Com and Palm within a three-year time frame.

The new CEO, Madden urged, should not walk in Hurd's footsteps.

"Hurd was the right CEO at the right time for HP," he said. "The next CEO will [now] need to take all of Hurd's hard work and set the company down a path for [long-term] growth."

Via ZDNet Asia

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