SAN FRANCISCO, Aug 7, (Agencies): Hewlett-Packard Co. has ousted its CEO for allegedly falsifying documents to conceal a relationship with a former contractor and help her get paid for work she didn’t do. News of Mark Hurd’s abrupt departure Friday sent HP’s stock tumbling. Shares of the world’s biggest maker of personal computers and printers have doubled in value during his five-year stewardship, and HP became the world’s No. 1 technology company by revenue in that time. The company said it learned about the relationship several weeks ago, when the woman, who did marketing work for HP, sent a letter accusing Hurd, 53, and the company of sexual harassment. An investigation found that Hurd falsified expense reports and other financial documents to conceal the relationship. The company said it found that its sexual harassment policy wasn’t violated but that its standards of business conduct were.

Hurd’s “systematic pattern” of submitting falsified financial reports to hide the relationship convinced the board that “it would be impossible for him to be an effective leader moving forward and that he had to step down,” HP general counsel Michael Holston said on a conference call Friday with analysts.
“The facts that drove the decision for the company had to with integrity, had to do with credibility, had to do with honesty,” Holston said, declining to elaborate.
Holston said the inaccurate financial reports related only to Hurd’s personal expenses.
Hurd acknowledged there were “instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP.” Hurd, who is married with two children, will get a $12.2 million severance payment and nearly 350,000 shares of HP stock worth about $16 million at Friday’s closing price. The company also extended the deadline for exercising options to buy up to 775,000 HP shares.

Affair
High-profile Los Angeles attorney Gloria Allred said she is representing the woman and “there was no affair and no intimate sexual relationship” between her client and Hurd. Allred, reached by The Associated Press late Friday, declined to comment further.
A person with intimate knowledge of the case told the AP that the woman worked as a host for more than a dozen events for CEOs that Hurd attended between 2007 and 2009. The person said the disputed expenses range from $1,000 to $20,000 each for travel, lodging and meals.
This person, who requested anonymity because this person wasn’t authorized to speak publicly about the details of the investigation, said many of the expenses were for meals after the events and that Hurd insists they were legitimate business expenses. The total amount of the expenses in dispute could not be learned.
Hurd has offered to repay expenses that were incorrectly filed, this person said.
The company’s chief financial officer, Cathie Lesjak, 51, was named interim CEO. She has been with the company 24 years but has taken herself out of the running to fill the position permanently. HP has set up a search committee to look for a permanent replacement.
Mark Kelleher, an analyst with Brigantine Advisors, said Hurd’s resignation boils down to “one person doing some really stupid things.”
“That gave a great deal of comfort to investors that this was not a company-fundamental issue,” he said.
Still, HP’s shares — which closed Friday on the New York Stock Exchange at $46.30 — tumbled 9.7 percent after hours to $41.85 as investors reacted to the stunning news of his resignation. Preliminary financial results HP released Friday for its fiscal third quarter came in slightly above analyst expectations.
Beloved by investors for his relentless cost-cutting — and scorned by thousands of laid-off employees for the same — Hurd was seen as rescuing the company from the mess left behind by his predecessor, Carly Fiorina.


COSTA MESA, Calif: Nike Inc is looking to double its piece of the action — the action-sports market, that is.
The company, which helped build running into a mainstream sport, expects sales at its action-sports unit — specializing in surfing, skateboarding and other “edgy” sports — to double to $1.2 billion within five years, the chief executive of the shoe and apparel giant said on Friday.
“We’re quite bullish on that growth prospect,” CEO Mark Parker told Reuters, speaking from the offices of Nike’s surf brand Hurley. Parker was in Southern California for the US Open of Surfing, sponsored by Nike and held in the nearby beach town of Huntington Beach.
Action sports is the term used to describe surfing, skate and snowboarding, and lesser-known counterculture sports like bicycle motocross, which together make up a $12 billion industry in the United States and about $22 billion globally.

It is a fast-growing category for Nike, which built its company and global image on more mainstream sports like running and basketball which still drive the bulk of Nike’s $19 billion in annual sales.
Choppy economic waters in the United States and abroad have hurt not only Nike’s mature businesses, but the action sports market as well. Sales in the independent surf and skate channel are down 2.4 percent this year, according to market intelligence group ActionWatch, which tracks such sales.
But in this enclave of Southern California’s sun-infused Orange County — home to a casual vibe but fat wallets — the world’s largest sports shoe and apparel maker is anxious to focus on growth.
In May, the company projected that its non-Nike brands will double in size by 2015, helped by doubled sales from surf brand Hurley and basketball shoe brand Converse, whose Chuck Taylor All-Star shoe carries retro cross-over appeal.
The action sports sales target cited by Parker includes just a small action-sports component of the Converse brand.
Investors, Parker said, need to appreciate the “ripple effect” of action sports within Nike’s overall portfolio.
A fabric used in Nike Swim might end up on a board short, or a motocross boot is made lighter through innovative running shoe technology. That shared design and technology innovation drives sales, he said.

Growth
“I think they (investors) appreciate the actual growth and what that represents,” Parker said. “That shows up on the top and bottom line. That gets people’s attention.”
Apparel giants such as VF Corp and Quiksilver have already staked a claim in the fast-growing market — sales of VF’s Vans shoes rose 24 percent in the second quarter — while retailers such as Zumiez, Pacific Sunwear of California and Journeys exclusively target skaters and surfers, or the teens who emulate them.
Nike currently is the No. 1 brand in skate footwear, a US market that is just shy of $2 billion, according to footwear analyst Matt Powell of SportsOneSource.
But it was a tough climb, requiring multiple attempts by Nike to prove its legitimacy. Nike built its presence by keeping supply artificially low and initially selling only to small skateboard shops — what Powell called “a classic Nike play.” It also lavished contracts and marketing dollars on pro skaters like Paul Rodriguez and Eric Koston.

“Their plan worked,” said Kent Uyehara, owner of FTC Sport in San Francisco, one of Nike’s first skate accounts in the country. “They’ve accomplished what everyone expected — which was to be the number one brand in skateboarding.”
But Nike, in an attempt to pad profit margins by raising prices, which are more expensive than competitors’, has put a damper on demand, he said.
“It’s backfired and it’s reduced the demand overall for the product,” Uyehara said. “The problem is these shoes cater to a 16-to-25-year-old. It shook up the consumer demand.”
Despite the higher prices, Nike-watchers say the company has excelled with a segmentation strategy that offers different price points at different retail venues, and working with retail partners for exclusive launches that build interest.
Although Nike says its skate sales are up this year, analyst Powell sees sales in the overall skate market down in the high teens, with Nike’s down in the mid teens.
Powell argued the industry is ripe for an overhaul, with more innovative product in the pipeline.