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Hewlett-Packard, investors traumatized by CEO's sudden exit

While stockholders fret over the leadership vacuum, attention focuses on the former actress whose harassment claims led to Mark Hurd's resignation.

August 10, 2010|By David Sarno and Walter Hamilton, Los Angeles Times

Without its star executive, Hewlett-Packard Co. was left rudderless Monday, its stock foundering, its future uncertain and some investors questioning whether the ouster was necessary at all.

Just days after the world's largest computer maker ejected Chief Executive Mark Hurd, investors and analysts began asking if the company's directors acted rashly. In his five years at the helm, Hurd had overseen a near-doubling of HP's market value to $100 billion.

After plunging almost 10% — and wiping out nearly $10 billion in value — in late trading Friday, HP shares failed to regain much ground Monday as investors remained anxious about the leadership vacuum.

Hurd resigned abruptly Friday after the company said he had falsified expense reports related to his relationship with a former B-movie actress who had worked for HP as an event planner. The company said it had discovered the irregularities as it was investigating the woman's claims of sexual harassment.

But Hurd did not violate HP's sexual harassment policy, according to the company, and over the weekend the woman, Jodie Fisher, said that she and Hurd never had an "intimate sexual relationship" and that she was "surprised and saddened" that Hurd lost his job as a result of the scandal.

She ended her statement, released Sunday by celebrity attorney Gloria Allred, by wishing Hurd and his family well.

"It's just odd," said Shaw Wu, a senior research analyst at Kaufman Bros. "Most people would agree that something untoward was happening, but was it enough for him to lose his job over?"

Wu said his clients — including large institutional investors — had expressed uncertainty about the company finding a replacement who could match Hurd's results.

"The only other guy that delivers these outrageous returns has been Steve Jobs. There's not many of these superstar managers out there," he said, though he mentioned Apple's chief operating officer, Timothy D. Cook, as an option.

In a letter to the New York Times, Oracle CEO Larry Ellison castigated HP for its decision to remove Hurd, also invoking Jobs' name, "The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," Ellison wrote. "That decision nearly destroyed Apple and would have if Steve hadn't come back and saved them."

As investors wrung their hands about the future of HP, the corporate world remained riveted by the revelations Sunday that the woman behind Hurd's fall was a former actress who in the 1990s appeared in films with titles such as "Sheer Passion" and "Body of Influence 2."

In 2007, Fisher, 50, was also a contestant on the reality TV show "Age of Love," in which women over 40 competed with 20-somethings for the affection of Australian tennis star Mark Philippoussis. Fisher was eliminated in the second episode.

"It's one of the crazier ones I've ever heard," said James Brehm, a senior analyst at global consulting firm Frost & Sullivan. "Having a reality-TV celebrity [who is] having her 15 minutes of fame be at the center of this is the most surprising."

Some questioned Fisher's own claim that she was surprised that her sexual harassment claim led to Hurd's ouster. Her lawyer, Allred, is known for taking on clients in headline-grabbing cases — including, recently, alleged former mistresses of golfer Tiger Woods.

"The only explanation I can come up with is a remarkable degree of naivete on [Fisher's] part about how this would play out," said Jerry Swerling, director of public relations studies at USC's Annenberg School for Communication. "I have a hunch it really got away from her a little bit."

Fisher said she met Hurd in 2007 and began working as a contractor for the company shortly after that. She worked for HP at "high-level" executive summit events.

Fisher, through Allred, declined a request for an interview. Hurd could not be reached for comment.

Sudden resignations, especially at a company the size of HP, can throw corporations into disarray because they sow uncertainty among investors and employees, experts said. That's amplified in HP's case because Hurd was highly regarded and had presided over an impressive turnaround following the tumultuous rein of his predecessor, Carly Fiorina.

"He did a really good job of circling the wagons, getting people aligned, getting [the corporate] direction agreed to and cleaning house a little bit," said Mike Norman, a partner at Sibson Consulting, a New York-based human-resource consulting firm.

HP's board said it had formed a search committee, headed by technologist and venture capitalist Marc Andreessen, and was considering candidates from both inside and outside the company.

The company has capable successors in-house, Brehm said, including Ann Livermore, executive vice president of HP's enterprise business, and Todd Bradley, the former chief executive of Palm, which HP acquired earlier this year.

HP did not respond to a request to discuss the progress of its CEO search.

david.sarno@latimes.com

walter.hamilton@latimes.com

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