HP CEO Mark Hurd resigns as Palm integrations loom

The stunning fall of Hewlett-Packard CEO Mark Hurd has left analysts and industry observers wondering how the company will continue to integrate recent acquisitions such as 3Com and Palm, as well as whether Hurd's replacement will change the direction of the company.

Hewlett Packard Mark Hurd sex scandalHurd resigned on Friday after the company's board found that he had falsified expense reports. The board discovered the expense report irregularities while conducting an investigation into whether Hurd had sexually harassed an HP contractor, Jodie Fisher, who accused Hurd of sexual harassment in a June 29 letter. The board cleared Hurd of sexual misconduct with Fisher, but said he falsified his expense reports to hide his relationship with her.

Now that Hurd is out, and HP CFO Cathie Lesjak has taken over on an interim basis, the focus has shifted to Hurd's eventual replacement. Who the company decides to replace Hurd with will largely be a reflection of which company HP views as its most serious competitor: Apple (NASDAQ:AAPL), Cisco or IBM.

HP is just beginning to integrate Palm into its corporate structure. The deal closed in early July, and HP has said it plans to release more webOS products, including a tablet later this year. Hurd said in an interview with the German newspaper Frankfurter Allgemeine in July that HP wants to focus on developing mobile phone hardware now that it has acquired webOS. However, he said that the company will continue to emphasize the corporate HP brand above all else, and that Palm might fade into the background as a "sub-brand," similar to HP Pavilion computers.

"While effective at cost cutting, Hurd's team lacked a compelling organic growth strategy," Deutsche Bank analysts said in a research note. "We expect the board to bring in outside management who is focused on investing for growth (vs. consistent restructuring charges and cost cutting) while simultaneously integrating the various acquisitions completed by Hurd." Analysts have mentioned Apple COO Tim Cook as a potential hire for the top job at HP.

For more:
- see this Reuters article
- see this WSJ article (sub. req.)
- see this NYT article
- see this Computerworld article
- see this WSJ article (sub. req.)

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