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Mark Hurd’s hastily announced departure from Hewlett-Packard (NYSE:HPQ) for conduct-related infractions may provide a buying opportunity for investors looking for a good entrée point for this Dow component.

The news has initially sent shock waves about the stock with the price falling to close at $41.85 on August 6 when Hurd’s resignation was announced, losing 9.7% of its value from the previous day’s close at $46.35. But there are reasons why this drop may be an overreaction:

  • Hurd has a history of creating a foundation for value that outlasts his presence. NCR (NYSE:NCR) continued to flourish after he departed as CEO, with its stock price rising from $18.27 on March 28, 2005, the day before the announcement that he was moving to HP, to the mid-$50 in 2007 prior to spinning off Teredata, Corp. (NYSE:TDC). While NCR’s shares have recently languished, Teredata’s stock hit an all time high this summer.
  • The fact that Hurd and the HP board quickly resolved the situation prior to rumors eroding internal morale and the company’s reputation is a big step towards maintaining internal and external confidence, and minimizing damage.
  • HP’s stock was already beaten up, down from a high of $54.75 on April 16 earlier this year.

Hurd’s tenure as HP CEO was, other than the allegations that precipitated his departure, a major success. But his departure—while a setback—does not pose the same degree of risk for the company and investors as the departure of a CEO whose personality is ingrained in the company, as I and others have argued is the case with Steve Jobs of Apple (NASDAQ:AAPL).

Hewlett-Packard’s situation will become clearer as the direction of the search for a new CEO takes shape and CFO Cathie Lesjak takes the reigns as acting CEO in the interim. But while the post-Hurd aftermath keeps the price down, there’s a good rational to support the risk of buying into HP.

There is some confusion over HP’s August 6 closing price, and it seems that the $41.85 indicated by major services as the market close reflects after hours trading following the announcement on Hurd’s resignation after 4 pm. See “HP Stock Price on Electronic Exchange Direct Edge Lowered Closing Quote,” Nick Baker & Nina Mehta, Bloomberg, August 8, 2010,

Source: Hurd’s Departure Brings Buying Opportunity for HP