HP Picks NCR CEO as its Next CEO

by Timothy Prickett Morgan

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.

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, 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 Hurd will not have the kind of power that 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 Hurd's appointment. But NCR did confirm that Hurd was leaving NCR "to accept a position with a large global technology company." Hurd's name was on a short list of potential candidates--along with former HP and Microsoft executive Rick Belluzzo, former Compaq CEO and HP president Michael Capellas (which has just sold MCI-Worldcom off to Verizon), 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 Hurd indeed has been named president and CEO of the company.

"I'm very proud of what NCR has achieved during my tenure as CEO," Hurd said, "and I'm confident that with the company's leading technologies and attractive markets, coupled with the management team's focus on execution, the momentum will continue." NCR has appointed Jim Ringler, an NCR board member and the retired chairman of Illinois Tool Works, as the interim CEO for NCR. He has already started work in NCR's Dayton, Ohio, offices. In his HP statement Hurd gave the standard speech you would expect him to give. "HP is one of the world's great companies, with a proud history of innovation, outstanding talent and enviable positions in many of its product lines and services," he said. "It's a great honor to join its leadership team and have the opportunity to build on its success."

Dunn said in her statement that HP's board unanimously chose Hurd, who was pre-screened by herself and board members Jay Keyworth and Tom Perkins. She said that they had reviewed "a broad field of candidates" and interviewed "many individuals" to come up with a short list of finalists, who were all presented to the HP board.

Hurd will take up his duties as president and CEO on April 1, 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 percent 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 percent today to close at $31.40, leaving NCR with a $7.1 billion market cap. Rumors started circulating over the weekend that Hurd was on the short, and through Tuesday's market close, NCR has lost nearly $2 billion in market cap.

To say that Hurd will be missed at NCR, as far as Wall Street is concerned, is an understatement. 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 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. Dunn said he could, and that is why the HP board picked him.