- Associated Press - Saturday, August 7, 2010

SAN FRANCISCO (AP) - The ouster of Hewlett-Packard Co.’s CEO leaves a hole in the world’s largest technology company.

Mark Hurd engineered a stunning turnaround of the Silicon Valley stalwart. Under Hurd, HP has spent more than $20 billion on acquisitions to transform itself from a computer and printer maker dependent on ink sales for profits to a well-rounded seller of hardware and lucrative business services. HP’s market value nearly doubled during his five years.

The company is suddenly leaderless as it stands at a turning point to integrate some of those acquisitions, the most recent of which was the purchase of smart phone maker Palm Inc. for $1.4 billion in June.

Hurd was forced to resign Friday after HP’s board of directors said Hurd falsified expenses to hide numerous private dinners with a woman who was paid up to $5,000 per event to greet people and make introductions among executives attending HP events that she helped organize.

The expenses were scrutinized when the woman recently accused Hurd of sexual harassment. The nature of the complaint could not be learned. Hurd and a lawyer representing the woman, whose identity could not be learned, all said the relationship was not sexual.

Hurd insists they were legitimate business expenses. Hurd doesn’t know the total value of expenses being disputed or have a full accounting of them, a person briefed on the situation said.

Hurd’s departure leaves it to another leader to keep HP on the course he mapped out.

HP’s stock fell nearly 10 percent to $41.85 in after-hours trading, when the news was released after the close of markets Friday.

The company has a deep bench in management and the stock drop was reactive and doesn’t reflect the company’s prospects, an analyst said.

“I don’t view his departure as catastrophic,” said Dinesh Moorjani, an analyst with Gleacher & Co. “The strategy is working fine. The level of uncertainty for me is relatively low just given the circumstances. This wasn’t a one-man company.”

Hurd, who spent 25 years at ATM maker NCR Corp. before coming to HP in April 2005, became a Wall Street darling. The $13.9 billion acquisition of Electronic Data Systems made HP a major player in technology services, challenging archrival IBM Corp.

HP also now offers computer networking, helped by the $2.7 billion takeover of 3Com Corp., racheting up the rivalry with Cisco Systems Inc. The Palm acquisition catapulted the company into the fast-growing smart phone business.

The additions also broadened the pool of people who could replace Hurd. It’s a deep bench, and internal candidates could have an edge, given that Hurd and predecessor Carly Fiorina - who got the boot in 2005 over concern about her management style and her decision to buy Compaq Computer - both came from outside HP.

Inside candidates could include Todd Bradley, who oversees personal computers and mobile devices at HP; Vyomesh Joshi, who leads the printer division; Ann Livermore, in charge of servers, services, software and storage; and Shane Robison, leader of HP’s corporate strategy and marketing. Chief Financial Officer Cathie Lesjak, now interim CEO, took herself out of the running for the permanent job.

In recent weeks, Hurd had started talks for a three-year contract that could have been worth $100 million, a person close to the case told The Associated Press. Those went off track when the woman accused him and HP of sexual harassment, this person said.

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