Mark Hurd's Legacy Lives On at Hewlett-Packard

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When Hewlett-Packard parted ways with former CEO Mark Hurd, the scandal-tinged affair left a bad taste in many an investor's mouth. The company and its shareholders took a broom to the boardroom, sweeping out many of the people responsible for HP's strategy in the Hurd era. Only two of HP's directors from that time still serve on the board.

One year later, HP unceremoniously dumped another chief executive who dared to try a bold new strategy -- built on feet of financial clay. Leo Apotheker wanted to take HP in a strongly software-based direction, acquiring British data-management specialist Autonomy in a blockbuster $11 billion deal. The people who hired and fired him, not to mention allowed Apotheker to strike that unfortunate deal, still make up the majority of HP's board. An $8.8 billion writedown of the $11 billion acquisition wasn't enough to bring in another cleaning squad.

So-called "queen of corporate governance" Nell Minow used HP as a prime example of bad governance, and Foolish star analyst Morgan Housel named names while asking for change. New CEO Meg Whitman isn't changing the troubled company much, leaving HP investors adrift in the rudderless aftermath of the cost-cutting Hurd era. What will it take for investors to grow weary of HP's bumbling strategic advisors?


HP's board is positively youthful by the standards of the Dow Jones Industrial Average , where the company is a long-standing member. The average HP director is only 56 years old and has served the board for about three years, putting the average starting point smack in the middle of the Hurd scandal. Age doesn't automatically translate into wisdom, but it seems odd that the Dow's most derided board also happens to be on the young side. The lack of long-tenured leadership here is partly a result of the post-Hurd overhaul. But the job wasn't finished when the refreshed board continued to make staggering mistakes.

And now we're back to a strategy that smacks of Hurd-style cost concerns at a time when a strict focus on innovation and bold ideas seems to be in order. Until that happens, you should expect Apple and Google to keep undermining HP's decades-long market dominance. The future is increasingly mobile, flexible, and information-based. That's how Google and Apple can pose such a large threat -- and why Apotheker's software focus may not have been such a bad idea, if he had only paid more attention to the quality of his acquisition targets.

Change starts in the boardroom, folks. I think it's time to sweep out some more of the remnants of HP's darkest hour, allowing the company to truly turn a new leaf.

The article Mark Hurd's Legacy Lives On at Hewlett-Packard originally appeared on Fool.com.

Fool contributor Anders Bylund owns shares of Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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