Today Mark Hurd decided to step down as HP's CEO accepting the fact that he had acted against the principles of company. The stock tanked 10% and he is planning to walk away with 28 million.
As an investor in HP I am a stunned by this event. Now while most people would think that I am holding Mark to higher standards based on nothing but his performance as a successful CEO, really the shock comes from the poor judgment he showed in getting involved in such a worthless incident. He was in a place where most CEOs only aspire to be, and he threw it all away on a silly fling. The point of contention - he charged his little fling to the company account. Putting aside the moral aspect to this entire incident, for a man making millions a year and with a reputation few could only dream off, what an unfortunate choice he made.
Now that it has happened the question is what next. HP is firing on all cylinders as a company executing on all fronts. The stock, until yesterday was only looking for a clear signal from the economy to get off to the races. But now the question is, do you buy this dip and assume that one man doesn't make a company such as HP or sell before the house of cards come tumbling down.
The problem here is that one man may not make the company but he might be the one holding it all together. Leadership is always key when it comes to steering a ship as big as HP. It is unclear if HP will find another leader such as Mark Hurd to captain this ship. If they don't it may not be long before the company starts looking like the old fragmented HP.
Having said all this I am going to buy on the dip. Assuming that 99.9% of the management is still in place and the acquisitions that have been done in the past few years is beginning to bear fruit, HP still might be able to keep going. With consolidation in the technology industry the path of the future, HP has become a truly integrated technology company. With a stronger networking equipment portfolio (the 3COM acquisition did not do it in my opinion) acquisition I think HP might be one of the most diverse and well integrated organization out there.
At 40 and below HP will be a buy in my books.