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March 29, 2005

HP picks NCR boss as its next CEO

The suspense is over. The executive search committee at Hewlett-Packard has announced that it has chosen Mark Hurd, the CEO of ATM, point-of-sale, and data warehousing specialist NCR, as HP's new president and CEO. Timothy Prickett Morgan reports...

By CBR Staff Writer

Mr Hurd was tapped as CEO for NCR back in 2003, and in two years turned the company from a money loser to a money maker with only a modest increase in sales. In fact, if you look at the numbers, Mr Hurd got the company to break even, and profits have come through modest growth. This is exactly the prospects he faces as he takes over the CEO position at HP, which has limited growth opportunities, faces intense competition in most of the markets it plays in, and probably has to cut costs further to boost profits.

And because Patricia Dunn is not about to give up her position as chairman of HP’s board, it means that Mr Hurd will not have the kind of power that Ms Fiorina had. She started out as HP’s CEO in 1999, replacing Lou Platt, and graduated to the chairman position after a year. When HP merged with Compaq in 2002, Michael Capellas was not made CEO (which could turn out to have been a bad move) but rather president of HP, and it wasn’t long before he jumped ship to take over as CEO at bankrupt MCI-Worldcom.

On Tuesday morning, when the story broke in The Wall Street Journal, HP stubbornly would not confirm Mr Hurd’s appointment. But NCR did confirm that Mr Hurd was leaving NCR to accept a position with a large global technology company. Mr Hurd’s name was on a shortlist of potential candidates – along with former HP and Microsoft executive Rick Belluzzo, former Compaq CEO and HP president Michael Capellas and Vyomesh Joshi, the executive vice president of the merged imaging, printing, and PC unit of HP. After the market closed on Tuesday and the cat was completely out of the bag, HP issued a statement saying that Mr Hurd has indeed been named president and CEO of the company.

Mr Hurd will take up his duties as president and CEO on April 1, 2005, and Bob Wayman, HP’s acting CEO, will return to his job as chief financial officer.

The news pushed up HP’s stock by 10% to close at $22.78, raising the company’s market capitalization by close to $6 billion in a day’s worth of rumors. Shareholders of NCR were a little less happy, and the stock dropped over 17% today to close at $31.40, leaving NCR with a $7.1 billion market cap. Rumors started circulating over the weekend that Mr Hurd was on the shortlist, and through Tuesday’s market close, NCR has lost nearly $2 billion in market cap.

To say that Mr Hurd will be missed at NCR, as far as Wall Street is concerned, is an understatement. Mr Hurd is 48 years old, and has spent 25 years at the company. He is known for being ambitious, energetic, driven, and focused on the bottom line. This is exactly what HP needs. The question now is can Mr Hurd, who has run a $6 billion company with 28,500 employees, run a conglomerate with $80 billion in sales, 151,000 employees, and many different product lines. Ms Dunn said he could, and that is why the HP board picked him.

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