HP Rebounds from Mark Hurd Scandal

by

comment

When marketing consultant, B-movie actress, and softcore flesh-peddler Jodie Fisher hit Hewlett-Packard with a sexual harassment lawsuit, things looked awfully grim for the vaunted tech giant. The company's officers determined that its CEO, Mark Hurd, had not been proven to have slathered Fisher with creepy come-ons, but had disguised mysterious payments to her with phony expense claims. That, and a golden parachute of $34 million in cash and stock, was enough to prompt Hurd's sudden resignation earlier this month. A Massachusetts pension fund immediately hit HP with a shareholder lawsuit, alleging that the scandal had caused the company to lose some $9 billion in market cap. Coming off of Carly Fiorina's, shall we say, exotic reign as CEO, and revelations that in 2006, company chairwoman Patricia Dunn hired Internet spooks to illegally obtain phone records of journalists and some of its own board members, this was grief stacked up on misery. Going into the second quarter financial numbers, everyone was wondering: how will HP survive this latest scandal?

By making scads of money, that's how. For the quarter ending July 31, HP's net income was $1.77 billion, matching Wall Street's expectations. Revenue exceeded the forecast, at $30.7 billion, a sizable jump from this time last year.

So it remains a mystery why Hurd was forced out so quickly and peremptorily. Not to diminish charges of sexual harassment or lying on expense accounts, but CEOs running a company this size usually survive this sort of thing. One could even argue that the board's swift action did more to depress the company's stock than Hurd's alleged misconduct. And the numbers are looking damn good, and that's all most investors and executive officers really care about. So what's the real story here? Why was Hurd let go with such dispatch? Will we ever know?

Add a comment