New York Times on HP CEO Mark Hurd’s Resignation

The New York Times has a story today where they outline the “real reason” HP’s board forced out now ex-CEO Mark Hurd. In short, while HP’s performance under his leadership was excellent:

Its 2009 revenue was $115 billion, up from $80 billion when he took over. Four years ago, H.P. even leapt past mighty I.B.M. in revenue, making it the country’s biggest technology company. Its average annual 18 percent profit increases were remarkable given the company’s mammoth size. And the stock price more than doubled on Mr. Hurd’s watch.

Stories about Mr. Hurd lavished praise on his no-nonsense style. H.P. under Mr. Hurd has “become the benchmark for efficiency in an industry known more for its whiz-bang appeal than its operational excellence,” wrote Adam Lashinsky of Fortune in 2009. Four months ago, Forbes put Mr. Hurd on its cover, attributing H.P.’s success to “dramatic cost-cutting” and “a brutalizing culture of accountability.” Even Mr. Hurd’s temporary replacement, the chief financial officer, Cathie Lesjak, who seemed to go out of her way to diss him, said in the press release announcing his resignation that “our ability to execute is irrefutable.” That could never be said during the reign of Queen Carly.

… Hurd was actually disliked among HP employees and had created a poisonous environment:

Then there were the company’s employees. The consensus in Silicon Valley is that Mr. Hurd was despised at H.P., not just by the rank and file, but even by H.P.’s top executives. (Perhaps this explains why Ms. Lesjak was so quick to denigrate him once she took over.) “He was a cost-cutter who indulged himself,” was one description I heard. His combined compensation for just his last two years was more than $72 million — a number that absolutely outraged employees since their jobs were the ones being cut.

Perhaps most meaningful to webOS enthusiasts, though, is how Hurd’s cost-cutting strategies impacted HP’s research and development efforts:

Mr. House’s brief against Mr. Hurd went well beyond his outsize compensation and penchant for cost-cutting. As Mr. House saw it — indeed, as many H.P. old-timers saw it — Mr. Hurd was systematically destroying what had always made H.P. great. The way H.P. made its numbers, Mr. House said, was not just cutting any old costs, but by “chopping R.&D.,” which had always been sacred at H.P. The research and development budget used to be 9 percent of revenue, Mr. House told me; now it was closer to 2 percent. “In the personal computer group, it is seven-tenths of 1 percent,” he added. “That’s why H.P. had no response to the iPad.”

By this measure, webOS and Palm fans may have reason to be glad that Hurd is gone. Perhaps with someone else at the helm, HP is more likely to follow through on its stated objective of “doubling down” on webOS and putting out genuinely exciting new mobile products. Hopefully we’ll hear who the new CEO will be soon, so that we can get rid of that nagging little doubt in the back of our minds.


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