Ex-HP CEO Hurd gets $28 million severance; Rubinstein an unlikely but inspired choice? 33
Mon, 09 Aug 2010 9:31 am EDT 
Sometimes companies like HP use their money to make problems just go away. Such is the case with Mark Hurd and the sexual harassment allegation that ended his career as HP’s CEO. In order to make Hurd’s exit as smooth as possible, the HP board lined the way with $12.2 million in cash as well as the choice to cash in more than 330,000 shares of HPQ stock (approximately $16 million, prior to the 10% plunge his exit precipitated) plus an extended option to purchase an additional 775,000 shares up until September 7.
The whole deal releases HP of any liability, but has to sting quite a bit for Hurd. Not only does he lose a job he clearly wanted to keep, but he’s also losing out on a three-year $100 million contract that was reportedly in negotiation to keep him on as CEO.
HP CFO Cathie Lesjak is serving as interim-CEO while the search for a new CEO and chairman is under way. Lesjak, a 24-year veteran of HP, has taken herself out of the running, though that hasn’t stopped her name from being bandied around. More serious in-the-running candidates include HP EVP of Personal Systems Todd Bradley; Ann Livermore, HP’s EVP of Technology Solutions Group (Enterprise); and Bob Wayman, retired HP CFO and interim CEO after Carly Fiorina was forced out. Bradley, as you may recall, was the CEO of PalmOne (the hardware division of a divided Palm, Inc) from 2001 to 2005, when he was recruited to HP by Hurd. Ranked by Fortune as one of tech’s smartest executives, Bradley is believed to have been instrumental in arranging HP's $1.2 billion takeover of Palm.
But what of the unlikely choice? There are several, but there’s one that obviously stands out in our mind and was first voiced during the media call over the firing of Hurd: Jon Rubinstein. The last CEO of Palm, Inc, still leading the Palm through its transition and merging into HP, is, as MG Seigler of TechCrunch put it, HP’s shot to be more like Apple. It’s no secret that every tech company has some envy of the fruit company, what with their blockbuster products, spectacular launches, constant media attention, and high-flying profits. On the launches and media attention front, only one other company came close to demanding the same kind of press as Apple, and that was Palm. The potential was there for the other two, if for want of bucks.
Rubinstein’s success or lack thereof at Palm had many contributing factors, least of which was a lack of the necessary resources to have webOS and the Pre ready for primetime at launch, not to mention some fairly questionable advertising choices. But back to Rubinstein and HP being more Appley. Rubinstein, as you might recall, was the SVP of Hardware Engineering at Apple and was responsible for products like the iMac, G4 and G5 processors, and the iPod. The iPod proved to be something of a success, leading to Rubinstein taking over the newly created iPod division of Apple, where he guided the development of the robust ecosystem that helps drive iPod and iPhone sales to this day. Rubinstein retired from Apple in 2006, and was hired by Palm CEO Ed Colligan the next year. The rest is, as they say, history.
So what would make Rubinstein the good choice for HP CEO? The man’s got vision, and HP has the bucks to execute on that vision. HP knows as well as any other tech hardware company that premium products are where it is. Apple doesn’t sell a notebook for less than $999, while HP’s cheapest comes in at a profit-margin-slicing $379 (not to mention netbooks for $100 less). Despite HP’s revenue being double that of Apple, the folks in Cupertino keep more of that as profit than their friends in Palo Alto. As any right-minded businessman will tell you: revenue is great, but profit is better.
With HP’s billions at his back, could Rubinstein transition HP from the cheap consumer brand perception it is currently saddled with to something more akin to Apple premium? Maybe, but that’s an incredibly risky choice for HP’s board. While we would argue that the performance of Palm shouldn’t be held against him (after all, they were in more dire straits than Apple when he came in there), the stumbles and failures can’t help but follow Rubinstein around.
If we were the betting types, we would pick Rubinstein to be our new HP CEO. But we’re not in charge, nor the betting types, so our imaginary money would be better wagered on somebody like Bradley. In fact, given his track record of amping up HP’s consumer PC business (and the aforementioned acquisition of Palm), Bradley is the perfectly logical choice to succeed Hurd. But who would take over his spot as Executive Vice President of Personal Systems and guide HP’s consumer PC business and newly expanded mobile division? Maybe there’s a spot for Rubinstein after all.
Source: BusinessWeek, TechCruch, The Wall Street Journal
33 Comments
Rubinstien may not get the top dog position, but I believe I may very well move in the food chain.
HP bought Palm and keeping Ruby was a part of the plan too...
Ruby is an asset !
Where he fits in right now is Palm... HP will be keeping a eye on him no doubt !
Ruby for CEO ? Anyday he got my vote !
Rubinstien may not get the top dog position, but I believe he may very well move up in the food chain.
I see the point of Bradley moving to CEO and Ruby moving to Bradleys current position. Ruby would still be in charge of Palm.
Phil McKinney would be a good choice. He has the political side down and is a better speaker than Hurd would be. Another gamble would be Rahul Sood, especially if they want to try and make HP a premium brand. I guess they could still accomplish that by making McKinney CEO and Sood into McKinney's role, or shifting everyone we love up one rung on the ladder: Bradley to CEO, McKinney to Bradley's spot, and Sood to McKinney's spot. Leave Jon as Palm division head so he can see his vision through. Changing that now would be changing lead horse mid-stream. Usually not a good idea.
24 years old veteran ? O_o
Uh... no. Just a 24-year veteran. No "old" there (though 24 years at one job might just make one old).
Two words - pipe dream. Rube is probably a solid guy but look at all the mistakes he made at Palm - timing of the Pre launch, marketing campaign, duration of the contract with Sprint, launch failure at Verizon and on and on and on.
While his performance at Palm was not all that stellar he's been at HP for less than a month. He knows his division and what else?
HP needs a visionary but one that is more than the Apple vision. HP has a significant enterprise business that requires something more than finding a way to sell consumers a computing slab for more than the competition. HP has hardware, software, services and more. Currently, not much of this is pieced together to take advantage of the company's scale. I don't see Rube as the guy to put the synergies together.
My guess is that they'll hire on more of a visionary who can maintain the cost controls that Hurd put into place and grow HP by launching new products and services rather than being forced to rely on acquisitions for growth.
Thanks for your rational thinking. I don't know where anyone would even explore the notion that Rubenstein even deserves a shot in the nose bleed seats.
Agreed. Maybe someday, but certainly not now.
Rubi struggled as both a product manager and CEO at Palm. He needs some more success on his resume and needs to climb the corporate ladder at a megagiant like HP.
Even if Pre had been a booming success and Rubi was a managerial genius, there is no way he'd have the respect of the Board or fellow executives coming from such a small company and being in the HP culture for an entire 5.5 weeks.
And HP is big, a couple of guys will move up or over to fill the void if they promote from within. But Rubi needs to get established before anybody starts reassigning him in HP. There is a lot of polished and experienced talent ahead of Rubi that we've never even heard of. Give him time to put down roots and grow. Rubi was a big fish in a small pond. HP is an ocean.
I'm not sure HP should become a "premium product" company. Sure, there's a niche for premium products, and Apple fills that well, but look how small their market share is in the PC field. Most people don't want to and simply can't afford to pay over $500 for a computer, no matter how fast/shiny/top-of-the-line it is. Sure you get higher profits from premium sales, but if HP starts focusing on this small niche at the expense of those $379 notebooks, they'll lose out on the largest segment of PC consumers. I think they should stick with a premium component and expand it, a la Envy/Voodoo, instead of sacrificing what most people want/need/can afford to go after profits.
Agree w/jaybee. Executive talent should be very carefully chosen. My Pre+ will be replaced by the Pre2; and it could be better than any mobile phone.
As much as it might be great for profits, I would hate to see HP move to an Applesque "premium" brand. The main reason I bought my last laptop from them was they offered some great features at a price point that I could afford. As much as great design can be rolled into better quality, you know you're just letting Stevie-J have his way with you every time you bow down at the Apple shrine. I like how HP runs the gamut with sub-$300 netbooks up to the (I think better than Mac) Voodoo line. No need to pull away from the masses just so you can seem like a pretentious douche and charge an Apple-tax. Keep making something for everyone, but hurry up and make me a Pre2.
They have the compaq brand to position in the middle market... but I agree that they shouldn't be shooting at "premium" when the economy is in such bad shape.
Also, they have the VooDoo brand for premium positioning. It's already the best hardware out there...
I like Ruby to run product dev, but not the entire company. First reason, I want him focused on smartphones and webOS.
Second reason, he approved the horrible marketing strategy that failed so bad. Not just the creepy girl, but the lack of any feature ads - even still.
It kills me when I see motorola advertising MHS on the DroidX, knowing that the Pre Plus has been doing that for 6 freaking months... and the list goes on. Every time I see an iPhone ad (other than facetime) I think about how much better webOS can do whatever they are showing. When I see any phone advertising anything about social media, I think of how much easier it is to load a picture from my phone to facebook than it is from my PC. I think about Synergy, etc. etc.
He clearly was not a sales/marketing guy and he shouldn't run a company. He makes great products and builds great teams.
/rant
Rubi can't even run a small smart phone company let alone one of the biggest companies of technology.. Don't even know why we even talking about this. But guess there's nothing else to talk about
Considering HP's decided to follow Palm's old roadmap and not come up with one of their own, I'd wager that Rubes was on to something and all he lacked was sufficient resources.
This should encourage Ruby, if the new webOS device(s) do well, and palm share of smartphones rises more than current windows mobile, than he can climb up ladder, other wise he may have to stay and keep working where he is.
Inspired choice? Really? Because Palm was so darn successful?
WebOS is a great OS to be sure and I like my Pre very much. But Palm and Rubenstein did not exactly cover themselves with glory.
From day 1 the Pre had half the memory that it should have (I bought it anyway, but it really should have had 16gb) or else it should have expandable memory. The same is true for RAM, as demonstrated by the "too many cards" issue that persists for Sprint owners. It lacked certain features that were already standard on it's competitors (voice dial, visual voicemail) or common on its aging predecessor (cut and paste).
Then there is the choice of Sprint as the sole carrier. While I am VERY happy with Sprint, so much so that staying with Sprint is more important to me that staying with Palm and webOS (although that is my preference), going with a small, and shrinking carrier was going to limit the ability to establish webOS at a time when Android still had a smallish phone base.
Finally, Palm's initial advertising campaign was historically bad. How many people remember that Lexus and Infiniti rolled out basically simultaneously? The Infiniti Q45 was universally proclaimed as a great car. But Infinit ran zen style commericials showing waterfalls and rainforests instead of cars (sound familiar). Lexus promoted its actual cars and took a sales lead it has never released. Ininiti compounded the mistake by going backwards with the design and performance of the Q45, Palm has a chance to mirror Infiniti again depending on what it does with the next webOS phone.
As far as I'm concerned, other than negotiating the sale to HP, Rubenstein has done little to deserve praise during his time at Palm.
Bradley will likely get the nod. No one at Palm will get consideration for one of the most complex and challenging jobs in IT.
I also doubt anyone from Palm will slide into Bradley's current spot. It is more likely that there are 4-5 guys in HP ready to take that position.
Large companies tend to have well defined succession plans but HR requires them to do a thorough and public job search.
Many will be interviewed but they already know who is going where.
Ruby needs to get WebOS 1.5 and then 2.0 out the door ASAP and some new hardware. He should have no other focus or goal.
So tired of hearing the same old "coulda, shoulda, woulda " arguments here.
If only HPalm would give us something NEW to talk about. Even the Palm thashers have disappeared? Nothing to trash but trash?
C'mon HPalm... Some news plz!
I also agree that Rubenstein should not be considered for the CEO position - he just doesn't have the experience. But I don't really hold Palm's performance against him too much. When he came on, Palm was already a sinking (many would say already sunk) ship. There just weren't the resources available to turn it around no matter how inspired the hardware. $500 million? That's not enough to advertise a roll of toilet paper - forget about something as complex as, and as foreign to most consumers as, a smartphone and al of its nuances. Anyway, the CEO doesn't sign off on advertising, that's the marketing directors job. I also understand going with Sprint - they didn't have the money to afford the larger carriers.
By no means do I consider him a perfect CEO, he did make mistakes. I just don't think ANYone could have done any better. He just came on at a bad time into an impossibe job. I think it has been clear that for at least 2 years acquisition was the only hope Palm had for survival. They have been treading water, hoping to stay afloat. Long before the Pre came along, they were already on life support.
I'm glad HP has bought Palm and I hope their resources will be enough to rescusitate Palm. Lots of money won't make it a sure thing. It's going to take a lot of work and a lot of lucky breaks and it still might not be possible. It just might be too late.
But we can hope.
Someone should really proof read this stuff, these don't even qualify as sentences.
"The potential was there for the other two, if for want of bucks.
Rubinstein
Rubinstein is a hardware guy. If you look at the guts of a Pre, you see top of the line stuff. That is his nitch. Advertizing, QA, and media relations is what killed Palm. These are all things a CEO needs to ensure are being done correctly. He did not. Just look at other small companies like HTC, who are doing a better job of distributing their resourses. Although, slow manufacturing is hurting them bad.
HP CEO is a huge job with world wide distribution of resources. I don
Yeah!! No!!!
Ruby seems like a great guy, he managed to pull together a solid team with solid talent and did a lot with few resources, but he isn't the man to lead HP.
Could he lead the consumer side? Possibly but even there I see others as even more capable. HP doesn't need a Steve Jobs at the helm, the need another Mark Hurd who gets back to the basic of running a company. HP's Steve Jobs should be the head of their consumer division, and even then it isn't Ruby. They need someone with a better track record of developing cool things for consumers that can appeal to the younger crowd with disposable income (like most of us) and let that person work his 'VooDoo' in front of the camera's. (Not that I have anyone in mind to work their VooDoo).
HP is just at a whole other level than the experience Ruby brings to the table. True that Mark Hurd didn't either, it was his focus on the basics and a great team beneath him that drove HP's revenue and stock growth, but it is still a very beast than anything Ruby has seen before.
And to tall that say he failed at Palm, take a look back at where Palm was when he started. He didn't fail at Palm, he did exactly what needed to be done at Palm and succeeded well beyond what anyone really thought he could do.
I don't see Rube moving up the chain of command to CEO, but I do see Palm/WebOS becoming a more up-front part of HP as a result of this (perhaps with an increased visual role at the company anyways).
Taking a chunk out of Apple is the potential golden egg here, and Palm's tech is the only shot they have.
Todd Bradley becoming CEO (very possible) would basically be a Palm takeover of HP from within anyways.
Don't think he did a great job with Palm. I don't think he warrants much consideration for the job. and hp is more then phones so who know if he's knowledgable about those businesses their actual earners.
I can't believe you ppl put so much stock into these higher ups the CFO & CEO are not innovating anything it's brains behind the scenes actually so the work that make a company what it is.....their just a face and hopefully witty when it comes to PR & marketing, if the decision of what speed proc and features goes into the new Pre2 for ex. falls to the CEO we got problems bc that's what ppl care about....remember the majority of ppl are stupid, like sheep, you put some flashy things in front of them convince them it's cool and they'll buy it bc the next person has it...perfect ex the iphone, a horrible smartphone in many areas but Apple made it flashy convinced ppl it was cool and they buy blindly, look @ me I have a piece of shit iphone that is way overpriced, but i'm cool bc it trendy...SHEEP I TELL YOU , HA!
I believe HP sees webOS as a potentially explosive division. The division needs engineering smarts as webOS is integrated into other hardware. Ruby is the obvious choice for that job, so he will stay where he is, but the position will grow.
Bradley grew his division and showed his ability to visualize the future with the Palm acquisition. I also expect the PC Division needs a nuts and bolts guy to take it forward, and HP probably already has someone primed for that role. I think Bradley will move up to CEO.
I don't see Rahul taking a different position either. I don't think he would want to move to Silicon Valley. Like Ruby, Rahul's position as a prime person in the emerging HP Premium division is slated to grow in influence. He has proven to be adept with PR by keeping us excited for webOS. His Voodoo experience tells us he can visualize and pull off premium hardware.
I think it is clear that Bradley is the front runner if they look internally. It will be interesting to see if they go external for this one though.
There are a few internal candidates that could be viewed as "dark horse" candidates. I have followed the transition of Palm, and I believe the new VP of Supply Chain is catching people's attention. He has experienced a meteoric rise in his career and shows the potential for this type of position, or something similar. Even if they choose Bradley, they could promote Kelly to Bradley's current spot. Probably a long shot though.
If Ruby became HPs CEO, he would be lost for Palm. Serieously, the CEO has better things to do than bring out new phones. He would eventually ask "Hows it going?", but the visionary work would be left to a Palm without Ruby.
I want Ruby to stay close to Palm
edit: IIRC it was Engadget who asked if Ruby was a candidate. When I read it the first time, I thought to myself "bullshit, why would they consider him as CEO of whole HP?" and "I hope not, Palm needs him"
Microsoft has Steve Balmer, Apple has Steve Jobs and Palm needs Steve Rubinstein
can I borrow a couple grand
No one is worth a severance of $28 Million. No one who cuts employees to improve the bottom line is worth a severance of $28 Million. No one who resigns to avoid the processes involved with harassment accusations is worth a severance of $28 Million.
I'm just sayin'.