- 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 at the Silicon Valley stalwart: From a one-trick printer-ink pony, he crafted a well-rounded seller of personal computers, printers and other technologies and services. HP’s market value nearly doubled during his five years.

He had brought HP to a turning point before it ousted him Friday saying he fudged expenses to hide numerous private dinners with a contractor who did marketing for HP. And his demise leaves investors wondering whether another leader can keep HP on the course he mapped out.

But his abrupt departure is not likely to derail those sweeping changes. He wasn’t an island: few CEOs are — Apple Inc.’s Steve Jobs notwithstanding.

“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.”

Details of the scandal relate more to Hurd’s personal life than to his leadership of HP, where he cut more than 40,000 jobs and made a series of targeted acquisitions. Moorjani contrasted Friday’s nearly 10 percent after-hours drop in HP’s stock value following the ouster of operational master Hurd against the market’s swoon after Jobs announced he had cancer.

Steve Jobs is one individual with a vision, whereas with operational issues, there’s a huge team that executes along with Mark Hurd,” Moorjani said. “So I don’t see as much of an impact.”

Hurd, who spent 25 years at ATM maker NCR Corp. before coming to HP, 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., ratcheting up the rivalry with Cisco Systems Inc. And Hurd’s most recent conquest — the purchase of smart phone maker Palm Inc. for $1.4 billion in June — catapulted it firmly into another key technology market.

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 new 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.

The company determined Hurd didn’t violated its sexual harassment policy but broke its rules of conduct.

The woman’s lawyer, celebrity attorney Gloria Allred, says the relationship was not sexual but declined to describe the harassment. Allred declined to identify her client or make her available for an interview.

So Hurd will get about $28 million in cash and stock — almost a third as much as the $100 million he was seeking — just to walk away. The person said Hurd realized he could no longer lead HP in part because at least two board members were convinced he had had a sexual relationship with the woman and was trying to cover it up.

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