By Peter Burrows and Ben Elgin Hewlett-Packard is often referred to as the granddaddy of Silicon Valley. But another computer company makes HP look like a Spring chicken. While HP was founded in 1939, NCR -- or National Cash Register as it was then known -- dates back to 1884.
Now, as BusinessWeek Online reported in a Mar. 28 story (see "HP's Next Chief: One Tough Call"), HP's (HPQ) board announced on Mar. 29 to put the tech giant's future in the hands of the man who has quietly resurrected NCR (NCR).
His name is Mark Hurd, 48, an executive whose management style and personality traits stand in stark contrast to ousted HP CEO Carly Fiorina. While she was a "celebrity CEO" known for her sales and marketing flair, Hurd is a low-profile, no-nonsense operations whiz. While many at HP felt Fiorina didn't mix enough with the troops, Hurd is known to walk the halls chatting with employees as he goes to get coffee. "He's not in some ivory tower," says an NCR colleague.
"EXECUTES LIKE MAD." More than 30 candidates were identified as possibilities to replace Fiorina, according to a source close to the search. Roughly a dozen were contacted, and the board interviewed about a half-dozen. It's not clear who was on the board's short list other than Hurd and Rick Belluzzo, chief executive of storage-equipment maker Quantum (DSS) and a former HP exec. But in the end, the board voted unanimously to offer Hurd the job, says the source. He'll be paid $1.4 million per year, with an annual bonus that could range from two to six times that figure, based on performance.
Even if Hurd lacks personal flair, he has put plenty of flash into NCR's performance in recent years. Since taking over as CEO on Mar. 14, 2003, the stock has rocketed 332%, to $39. Last year's profits jumped 391%, to $285 million, as sales rose 7%, to $6 billion. While some analysts criticized Fiorina for being overly promotional, Hurd has a record of underpromising and overdelivering -- something NCR has done for eight consecutive quarters. Investors seem pleased so far: Even before the official announcement was made, the rumors had lifted HP's stock price. It closed on Mar. 29 up by 10%, to $21.78.
"He likes to say that it's impossible to look smart with bad numbers, and it's impossible to look bad with good ones," says one NCR colleague. Says another co-worker: "He executes like mad." Hurd joins HP on Apr. 1 succeeding Robert Wayman, who remains as chief financial officer. Hurd will also become president and take a seat on the board.
LOGICAL CHOICE. NCR's snappy turnaround won't guarantee Hurd an easy time as he moves from NCR's headquarters in Dayton, Ohio, to the fish-bowl-like existence of Silicon Valley. Calls made to headhunters and other executives brought intense skepticism that Hurd -- or any young CEO -- could make the jump from a $6 billion company to an $80 billion tech giant with thousands of different product lines. "Mark is a very decent guy, but I can't believe he would be remotely qualified," says one headhunter.
But on paper, HP's choice has some logic. Although NCR is a far smaller company than HP, Hurd is one of a handful of executives who has run a multiline, multibillion computer company successfully. The NCR lifer has focused on NCR's Teradata business, which makes high-end computers -- a tech segment that HP has struggled with in recent years. He also has improved the performance of NCR's ATM business and returned its retail point-of-sale device business to profitability.
And Hurd has been working through many of the exact problems HP faces. Take corporate culture. HP has a vexing morale problem, due partly to a slow slide that began in the late 1990s that was exacerbated by Fiorina's effort to impose a top-down centralized management style on an egalitarian, bottoms-up culture. When Hurd took the reins, NCR was seen as a has-been player from another era. "Our employees have always been tremendously loyal," Hurd told BusinessWeek in a 2003 interview, "but now we're bringing back the pride."
REVIVAL STRATEGY. The technology hurdles are similar, too. In buying Compaq, HP made a giant -- most say ill-conceived -- bet that it could profit by reselling industry-standard computer technologies rather than make its own proprietary chips and operating software. The idea was for HP to add in special software and services to make its Windows/Intel and Linux/Intel computers beat the pants off bare-bones gear from the likes of Dell (DELL).
Hurd executed a similar strategy to revive NCR. The Teradata unit is the leader in sophisticated "business intelligence" software that runs on standard boxes. This software lets companies get a single, powerful look at the reams of data they've built up over the years. Sure, IBM (IBM) leads the big-iron market when it comes to machines that handle massive amounts of transactions -- say, airplane reservation systems. But NCR's software lets companies scour all their data to make more informed day-to-day decisions.
Obviously, Hurd won't bring NCR's special sauce with him to HP. But HP needs someone who can turn its commodity hardware into something more profitable -- a hurdle Hurd has overcome.
"NOBODY SHRINKS." Then there's structure. Fiorina tried to centralize HP's huge array of businesses, but her changes never jelled. Prior to taking the top job at NCR, Hurd drew praise for managing operations across the company's disparate businesses, ranging from low-margin gear used in grocery check-out lines, to multimillion data-warehousing systems. And while Fiorina was reluctant to get out of poorly performing businesses, Hurd seems to have a knack for "portfolio management" -- understanding how to shift resources from maturing businesses to stay focused on growth opportunities.
Still, fixing a company as complex as HP is a daunting task that will stretch Hurd's abilities to the limit. No doubt, he'll be a change of pace. He's known to eschew hierarchy, calling directly to low-level salesmen to check on deals and for inviting tough questions at the company meetings he holds after each quarterly announcement. "People aren't afraid to ask him questions. Nobody shrinks from him," says a colleague at NCR.
But if HP is going to get back on the right track and compete more effectively, Hurd better have some quick answers for some far more daunting questions. Burrows is BusinessWeek's Computer editor in Silicon Valley, where Elgin is a correspondent