Hewlett-Packard shares on the New York Stock Exchange fell more than 8% on Monday, as Wall Street digested the surprise resignation of HP Chief Executive Mark Hurd following allegations of sexual harassment.
By early afternoon Monday, HP shares had recovered some, hovering around 7% lower than its closing price on Friday, when the company announced Hurd's departure. While HP's share losses on Monday started at 8.4%, which amounted to as much as a $9 billion loss in market cap, it marked a recovery from after-hours trading Friday, when the stock price hit a 52-week low of $39.92.
Hurd's resignation followed allegations of sexual harassment by an independent marketing contractor who had worked for HP for a couple of years starting in 2007. While an internal investigation cleared Hurd of violating HP's sexual harassment policy, the company board found that Hurd had violated the company's standards of business conduct.
Hurd had a "close, personal relationship" with the contractor, but never disclosed it to the board, the company said. In addition, the CEO fudged expense reports in order to hide the relationship. While Hurd offered to reimburse the company, it wasn't enough to satisfy the board.
On Sunday, the contractor, Jodie Fisher, released a statement through her lawyer, saying she "never had an affair or intimate sexual relationship" with Hurd.
"I was surprised and saddened that Mark Hurd lost his job over this," Fisher said. "That was never my intention."
Fisher, who worked as an actress in the 1990s, said she had reached a private settlement with Hurd. Details were not disclosed.
"I have resolved my claim with Mark privately, without litigation, and I do not intend to comment on it further," Fisher said.
According to her Los Angeles lawyer, Gloria Allred, Fisher is a single mom with a young son and a degree in political science from Texas Tech. She worked as an actor in various television shows and films, "some of which were R-rated when she in her 30s." Most recently, Fisher was one of the actors in the NBC reality-TV show, "Age of Love."
During his five years as CEO, Hurd is credited with making HP the world's largest technology company and returning the company to steady growth through unprecedented levels of operational and financial discipline. Hurd also led the company through several major acquisitions, including EDS, Mercury, 3Com and Palm. The purchases reinvigorated the company's brand and substantially broadened its addressable market, industry observers say.
Hurd has been replaced with Cathie Lesjak, chief financial officer and interim chief executive. Analysts say the company will have to move quickly to find a permanent replacement in order to calm Wall Street's jitters.