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HP's Hurd Is About to Be Tested

After a sterling three-year run, the company's CEO faces a weaker PC market and a stronger Dell
HP's Hurd Is About to Be Tested
Jason Seiler

W. Shannon Reid has been a fan of Mark V. Hurd ever since Hurd took over as chief executive at Hewlett-Packard (HPQ) three years ago. But last month, the portfolio manager at the Evergreen Strategic Growth (ESGIX) fund cut back on his fund's holdings in HP. He trimmed the stake at the end of December from 3.3% of his fund, or 651,470 shares, to 2.9%, because of concerns over how Hurd will fare in the year ahead. "There's no question that [2008] will be his most challenging year," says Reid.

Hurd took over HP in March, 2005, at a tumultuous time. The company had struggled under his predecessor, Carleton S. Fiorina, and she was ultimately dismissed after clashing with the board over how to improve HP's performance. Hurd moved quickly to quell the drama and put the tech giant back on track. He cut costs and got operations humming, helping the company boost profits by 17% last year, to $7.3 billion, as revenues rose 14%, to $104 billion. From the day Hurd was named chief executive until the end of 2007, HP's stock surged 132%, about five times the return of the Standard & Poor's 500-stock index.