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Hurd's inglorious departure sparks speculation about HP

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The resignation earlier this month of Hewlett-Packard Co. Chairman and President-CEO Mark Hurd has set off two waves of speculation. The first surrounds the announced and tabloid-ready reason for Hurd's resignation: the questionable circumstances surrounding a sexual harassment claim against Hurd by Jodie Fisher, a sometime actress and former HP contractor. “The investigation determined there was no violation of HP's sexual harassment policy, but did find violations of HP'S "Standards of Business Conduct,' ” according to an HP news release. Those violations were apparently enough to cost Hurd his job. (HP declined to comment for this story.) The second wave of speculation involves industry pundits skeptical of the reason provided for Hurd's resignation. Many observers believe that other, unpublicized rationales must exist that offer the true explanation for Hurd's exit. These pundits point to dissatisfaction within HP's rank and file, to its dwindling brand power and to the supposed need for an innovator to lead the company. Much of this speculation stems from the perception that Hurd's punishment seemed draconian. “It doesn't seem like it was enough to fire the guy,” said Al Ries, chairman of brand consultancy Ries & Ries. Some observers have asked if HP, which was guided by APCO Worldwide, a public relations firm specializing in crisis management, overreacted by demanding Hurd's resignation. Perhaps influenced by BP's recent missteps in crisis communications, HP decided to get out in front of the story. (An APCO spokesperson also declined to comment for this story.) Brannon Cashion, president of brand consultancy Addison Whitney, said HP, which he described as a conservative company, made the right move to protect its brand. “When you're a market leader like HP, a lot of the time it's the more prudent course to cut ties right away as opposed to waiting it out and to have to constantly react to the issue,” he said. “I think they've done O.K.,” Martin Reynolds, VP at Gartner Research, said of HP's handling of the situation. “The only problem they face is that they've got themselves too much in a box. All of them have agreed to not say anything further.” He said the silence following the initial announcement has opened the door to speculation. Case in point: Rob Enderle, principal analyst at the Enderle Group, who said the move didn't make sense to him unless other, unmentioned factors were at work. “The board wanted to remove him for a lot of reasons but wanted a trigger,” he said. “Jodie Fisher, I think, was that trigger.” Jim Gregory, CEO of brand consultancy CoreBrand, agreed: “I think it was almost an excuse,” he said. CoreBrand's Brand Power rankings show a continued decline of HP's brand favorability since it peaked in 2003 at 76. Hurd took over as HP CEO in 2005 when the brand had dropped to 72. Since then, the rating has continued its slide. In the first quarter of this year, it stood at 67. Additionally, Gregory said that the opinion of HP management has slipped: With its ranking of 64, HP falls to the bottom among its peer group: IBM Corp. (74), Apple Inc. (67) and Dell Inc. (64). Despite CoreBrand's assessment of HP's brand performance, Wall Street liked Hurd. The trading day following his resignation, the company's share price tumbled 9.7%. In addition to building the company through such acquisitions as EDS and Palm, Hurd also cut costs, which may have endeared him to Wall Street but not to some current and former HP employees. In the wake of Hurd's resignation, some blogs written by former HP employees performed virtual dances of joy. Most prominently, Charles House, a former HP staffer and co-author of “The HP Phenomenon,” wrote on his blog that Hurd's departure was good for the company because of the poor morale he had created among employees. After writing that Hurd was “profane, a bully, autocratic, threatening, demeaning, vindictive and rude,” House continued: “The Voice of the Workplace, HP's thirty-five year historic "measure' of employee feelings (done every five years) showed in April an astonishing finding—more than two-thirds of HP's employees would quit tomorrow if they had an equivalent job offer. Not a raise, not a promotion, simply an alternative. That number never used to be in double digits.” Others have speculated that while Hurd excelled at cutting costs and positioning HP for the future, he was not the man to take the company there. A recent story on IDG Enterprise's Computerworld.com said, “HP's interest in a CEO with a little more of Steve Jobs' DNA may have been telegraphed [the day Hurd's departure was announced] when HP signaled a new approach with Marc Andreessen,” who handled press inquiries about the shakeup. The story called Andreessen “a Silicon Valley icon with a record of innovation.” Similarly, a story on Ziff Davis Enterprise's eWeek.com had already moved on to speculating about Hurd's successor. Among the listed candidates to replace him is HP Exec VP Ann Livermore. Addison Whitney's Cashion said he does not see any long-term fallout for HP from the Hurd situation. “One good quarter will make the Street forget about a lot of this stuff,” he said. M
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