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HP's Next Chief: One Tough Call

By Ben Elgin and Peter Burrows Less than two months after ousting high-profile Chief Executive Carleton S. Fiorina, Hewlett-Packard (HPQ) is on the verge of naming a new CEO. Barring any last-minute obstacles, the announcement could come by the end of this week, BusinessWeek Online has learned. A new CEO was initially expected to be named as early as Tuesday, Mar. 29, but it now appears any announcement will take at least a couple of more days, according to a source familiar with the search.

Although it's unclear who the front-runner is, the person is a surprise choice, according to a source close to the search. Not among the candidates speculated in the press, this person is described as a younger man who is a little-known tech executive with strong operations credentials and a strong track record. The source says he runs a public company that is like a "mini HP" -- much smaller than the $80 billion HP colossus, yet also competing in a broad array of markets.

SPRAWLING EMPIRE. One intriguing possibility, based on this description, could be NCR (NCR) Chief Executive Mark Hurd. Since he took over as CEO of the $6 billion company in 2003, NCR's stock has climbed 332%, and its 2004 profits jumped fourfold, to $285 million. Hurd, 48, was previously NCR's operations chief.

Since becoming CEO two years ago, Hurd has returned the outfit's retail unit, which makes point-of-sale devices used at check-out aisles, to profitability, while cranking up investment in growth opportunities. NCR, like HP, is a tech icon, founded in 1884 as National Cash Register (see BW, 11/8/04, "Going 'Ka-Ching' at NCR"). Hurd did not reply to numerous phone calls and e-mails seeking comment for this story. HP declined to comment on its CEO search.

Whether it's Hurd or the CEO of another "small" tech company, the incoming boss must quickly grasp HP's mammoth scale. The company has 151,000 employees and product lines that range from calculators and digital cameras to billion-dollar tech-services contracts.

INTERNAL FRICTION? Some of these units face vast challenges. In PCs, for instance, HP has been clobbered by Dell (DELL) and faces no easy path to solid profitability (see BW Online, 2/22/05, "Making HP 'Old Reliable' Again").

The incoming CEO also will face the daunting task of bolstering HP's management depth. The executive ranks have been thinned through steady attrition and forced departures in the years following its 2002 acquisition of Compaq Computer. Some key remaining execs, including Chief Financial Officer and interim CEO Robert Wayman, have pushed back retirement plans to guide HP through this transition period.

Retaining others could be a difficult task. Take Vyomesh Joshi, the head of HP's lucrative printing and imaging business, which supplies over three-quarters of HP's operating profits. He's viewed as the top internal candidate for the CEO post. Should Joshi be passed over, particularly for an exec from a much smaller company than HP's $24.2 billion printing biz, he could eventually jump ship to run a company of his own. Joshi declined to comment.

PREMIUM ON SPEED. Aside from Joshi, another top candidate considered by the board is Rick Belluzzo, chief executive of storage-maker Quantum (DSS) and a former HP exec. Belluzzo did not return calls seeking comment (see BW Online, 3/8/05, "Handicapping the HP Hopefuls").

Naming a chief executive this week would mark a speedy conclusion for the search, which began following Fiorina's Feb. 7 ouster. Typically, chief executive searches take from three to six months. But with HP's comeback plans hinging on who gets to occupy the corner office, time is of the essence. Elgin is a correspondent in BusinessWeek's Silicon Valley bureau, where Burrows is Computer editor

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