Remember last summer, when Hewlett-Packard’s CEO Mark Hurd was forced out of the company after being accused of sexual harassment by HP contractor Jodie Fisher?Well, the world is still waiting for the details of that ouster and the alleged sexual harassment–the latter of which are contained in a letter that is currently under seal in a shareholder lawsuit case.
And those details are important, given the massive amount of damage that appears to have been done to HP shareholders by Hurd’s exit.
How much value has Hurd’s departure cost shareholders?
Let’s think it through.
In the days after Mark Hurd resigned, HP’s market value fell by $10 billion.
Nine months later, after hiring a new CEO and then reducing its performance outlook, HP is still worth $10 billion less than it was before Hurd departed.
And that’s not even the whole story.
In the same timeframe, the NASDAQ is up more than 20%. So, assuming HP had merely traded in line with the NASDAQ, its value would have increased by another $10 billion.
And then there’s what’s happened to the stock of the company Mark Hurd joined after leaving HP: Oracle. Oracle’s stock has risen more than 50% in the 8 months since Hurd became its co-president. Its value has increased by $60 billion.
So, putting all of that together:
HP’s value has fallen by $10 billion since Mark Hurd left, while the NASDAQ has increased more than 20%. And the value of Hurd’s new company, Oracle, has appreciated by $60 billion. The company is now worth 2X as much as HP.
Would HP have performed better if Mark Hurd were still CEO?
Given Hurd’s track record at HP, as well as HP’s crappy performance since he left, the answer is probably “yes”–HP would have performed better.
Would Oracle have performed less well?
Given that Hurd is probably adding at least some value at Oracle–if not a lot of value–it seems safe to say that without him, Oracle would have performed worse.
So it seems safe to say that Hurd’s departure from HP has cost the company’s shareholders at least $10 billion and probably a lot more.
$10+ billion is a lot of money. And given the controversial circumstances under which Hurd was forced out of HP–many people felt that HP’s board over-reacted and dumped Hurd just to protect its own posterior–it is certainly fair for HP shareholders to wonder whether the board acted appropriately.
This is why everyone continues to await the full story behind Mark Hurd’s exit from HP, including the letter that accused Hurd of sexual harassment and prompted the board’s investigation and, ultimately, decision to send him packing.
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