Analysts: Hurd unlikely to split HP
Published: 30 Mar 2005 13:30 BST
The appointment of NCR chief Mark Hurd as HP's new president and chief executive is a sign the board is committed to keeping HP intact, industry experts have predicted.
Hurd has experience in selling a diverse set of business hardware and software products, including automated teller machines, databases and sales applications from his NCR days. Rather than break up the company into different entities, HP's board has made clear it favours a "portfolio" approach, in which the tech giant offers a full suite of products to different customer sets, according to some analysts.
"If they picked somebody who's got a background of selling off or breaking up companies — Michael Capellas has done that twice, for example — (it) would indicate that a breakup was likely," Frank Gillett, an analyst at Forrester Research, said.
Andy Butler, research director at Gartner Group, concurred. "The appointment strengthens our belief that there is no sense in splitting up HP," said Butler. "His mission will be to keep HP as one complete entity."
Hurd faces significant challenges in his new post, not the least of which is running a company of HP's size. The printing and imaging business at HP alone last year had roughly four times the revenue of NCR. Overall, NCR made $6bn last year, while HP pulled in nearly $80bn. Also, HP has consumer and commodity businesses, which NCR never had, added Butler.
Hurd "has to scale up whatever he knows from NCR to a much bigger playing field," said Roger Kay, an analyst at IDC.
Strength in diversity?
The incoming chief executive will also have the ongoing challenge of directing a company undergoing a lot of change, in the face of intense competition from Dell and IBM.
"It's a strategic challenge," said Chris Foster, an analyst at Technology Business Research. "It's transforming this company from its hardware roots — and the Compaq hardware roots, as well — into a software and services company that can execute. The future of tech is not in the PC and it's not in servers. It's getting to the level where they're more like IBM, where software and services drive the company."
Indeed, Gillett said that HP has yet to prove that its diversified portfolio strategy will pay off, something that won't become clear for another six months or a year.
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