Sinewy Mark, accosts ‘Hurd’les!

When IIPM comes to education, never compromise

He salvaged HP from the Fiorina storm, but will he be able to braze out weaker PC market and strong competition from the likes of Dell?

The day NCR put out a release about Mark Hurd’s quitting circa 2005, NCR’s stocks dipped southwards by 17%. It was that kind of respect that this man drew at the Wall Street before accepting to be HP’s knight in shining armour post a debacle known as Carleton S. Fiorina, the brain behind HP’s Compaq takeover.

And Hurd continues to be the board’s favourite man since his era began. A contrast to flamboyant Fiorina, Mark Hurd is a man who’d pass a crowded metro station without anybody noticing him. But in Hurd is also a man who’d like to roll up his sleeves and get on with the job rather than elaborating on a futuristic vision of a typical ‘visionary’ CEO.

Hurd moved to HP at a time when shareholders were screaming in his ears for that rarity called profits. And he got on with the job hands on. Being an operations man certainly has its pros and cons. Hurd chose the pros first. Throwing a slew of cost cutting measures, Hurd cut down costs that rang a bell on Wall Street when an increase of 17% in profits was announced last year to the tune of $7.3 billion. And revenues rose 14% to $104 billion.

“The story really for us has been in the past two years, we have been able to keep our costs flat. However, if you were just to look at a simple piece of paper, it would say, costs are the same at HP in 2007 that they were in 2005. Difference is $18 billion dollars more revenue on the top line….,” had said Hurd at a keynote address last year.

Now to the ‘cons’. While year 2008 has got on to a good start with first quarter net revenue up at 13%, or $3.4 billion, from a year earlier to $28.5 billion, speculations on a grim PC markets is all it takes to put a question mark on HP’s future prospects. Moreover, considering the fact that Dell will soon be reaping the benefits of its retail strategy (as it decided to sell through the indirect route from last year), it will be difficult for Hurd to maintain HP’s dominant position in the global PC market. While one really cannot doubt Hurd’s style of running this giant, his job now is to sell more rather than clean internally.

From a 25% increase last year, PC sales of HP is bound to take a hit in wake of a worldwide crunch in hardware sales and is hence expected to grow by only 5.4%. To cater to the situation, Hurd has already outlined his aggressive intents by announcing promising new products in the printer, PC and the enterprise markets for the year 2008. However, industry watchers are doubting whether this move be enough to maintain HP’s momentum in the long run.

Mark Hurd has done the rescue act before but HP’s shareholders expect nothing less from him this time as well. That’s exactly what happens when you save the Titanic from sinking. They expect you to do that again & again...

Edit bureau: Shashank Shekhar

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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