New HP chief wants to get back to the basics

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Mark Hurd, the new CEO of Hewlett-Packard Co., has a reputation as a straight-shooting, operations-focused leader-qualities that are expected to serve him well as he works to get the company back to the fundamentals of business.

HP's board of directors announced last Tuesday that Hurd, previously CEO of NCR Corp., has been hired as president-CEO. He succeeds Carleton Fiorina, who resigned in early February at the board's request.

The board wanted a leader with a strong operational background, global experience, technical knowledge and the ability to "hit the ground running," said Patricia Dunn, an HP board member who served as non-executive chairman after Fiorina's departure.

Hurd is credited with turning around NCR, which was struggling when he took over as CEO in 2003.

"I see a company that is fundamentally sound. HP is a leader in a great many categories and services," Hurd said in a conference call last Wednesday.

However, he added, "The company is not performing to its potential."

Hurd said his immediate priorities are to improve operations, create demand for HP's products and services, and drive profitable growth.

"It is back to the fundamentals of business," Hurd said. He said it was too early to comment on specific marketing or business strategies.

HP, which acquired Compaq Computer Corp. in 2002, has struggled to deliver predictable results to the financial community, including top-line revenue growth and strong growth in bottom-line profitability, according to researcher IDC.

"We believe the appointment of Mr. Hurd is an acknowledgement of where HP needs to focus-specifically, the ability to increase its overall operational efficiency and the associated ability to deliver predictable, and more profitable, results," IDC said in a research brief issued last week.

IDC said that in the next few months, it expects HP to focus on improving its operations "while not surrendering its roots to drive innovation across its product portfolio."

IDC does not expect HP to spin off any of its operating units as a result of the appointment.

"The board made a gutsy move in hiring Mark Hurd," said Merrill Lynch in a research report issued last week in which it reiterated its "buy" recommendation.

Merrill Lynch said the pros of hiring Hurd include his strong track record at NCR, where he improved margins through a $250 million cost-cutting program; his pragmatic approach to business, and his experience running the PC, server and services businesses at NCR before becoming CEO.

On the con side, Hurd comes from a smaller company and doesn't know HP well, Merrill Lynch said.

Martin Reynolds, VP at research firm Gartner, said, "He has to figure out how to get the business running on the straight and level again."'

"He has a relatively low profile, and some people were surprised that he's coming from what one would classify as a relatively obscure vendor. But they're not picking him to save money. They're picking someone who is right for the job."

One of Hurd's first organizational challenges will be finding a successor to Allison Johnson, former senior VP-corporate marketing, who departed shortly after Fiorina. Johnson is now VP-worldwide marketing and communications at Apple Computer.

Johnson spearheaded HP's rebranding campaign following its acquisition of Compaq Computer Corp. and was responsible for leading the company's increased marketing push into the enterprise market.

Last year, HP launched a major b-to-b campaign, including HP's first use of TV for enterprise marketing. The campaign, "Change + HP," was created by Goodby, Silverstein & Partners.

Goodby, Silverstein declined to comment on how the executive change might affect the agency relationship or advertising strategies.

In its report, Merrill Lynch said that Hurd's style should be a good cultural fit with HP: "He is a blue-collar CEO, more interested in rolling up his sleeves to solve problems than appearing in front of cameras. HP employees should like and possibly be inspired by him."

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