H-P Clears the Air, but Not the Cloud

When someone you count on betrays your trust, it's natural to ask what else they've held back. This is something that every H-P shareholder should be demanding of the board -- and of its new chairman in particular.

Here's a question that's more to the point: Does Hurd even know what else is hidden?

Hurd said Friday he was "very disturbed" by what he's learned about how the leak investigation was conducted. He said he attended some early meetings on the investigation but missed a key report in which the pretexting strategies were discussed.

It's tempting to take his declarations of blissful ignorance at face value, except for three things:

First, as a board member, why did he miss a report that he knew, if he had been paying attention in those meetings, would be important?

Second, why did he wait until after reports surfaced suggesting he may have known about the pretexting? Why not come clean earlier?

Third, and most significant for H-P investors, why didn't Hurd, not only the top manager but a board member to boot, have the slightest idea that such a mess was in the making? Isn't it part of his job to keep these kinds of things in check?

It's a terrible position for any leader: some malfeasance is uncovered, and you were either complicit in it, or oblivious to it. You're either corrupt or inept. That's the position in which Mark Hurd has found himself. And on Friday, Hurd threw himself wholeheartedly onto ineptitude.

I don't own any shares of H-P. I never have, and seeing the company today, I certainly don't plan on it. The impressive turnaround that H-P has started may well continue. But investors tempted to stay with the stock need to ask themselves whether someone who has confessed to being so out of touch on something so important can be trusted as both CEO and chairman.

At the press conference Friday, Hurd started off by saying, "This is a complicated situation, and the more I look into it, the more complicated it becomes."

Actually for H-P investors, it's beautifully simple: Until you know what is really going on inside H-P, just walk away.