Hewlett-Packard chief quits after sex harassment allegations

The chief executive of the world's largest computer maker, Hewlett-Packard, quit last night over a sex and expenses scandal that has shocked Wall Street.

The company said it had been investigating a claim of sexual harassment against Mark Hurd, one of the most respected executives in the technology industry, which is understood to have come from a former contractor with whom Mr Hurd had a relationship.

Although the harassment allegation was dismissed by outside legal counsel, Mr Hurd admitted "instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP".

"This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time," Mr Hurd added.

Robert Ryan, the lead independent director of the board, said it deliberated extensively about the matter and "recognises the considerable value that Mark has contributed to HP". Cathie Lesjak, the company's chief financial officer, will step in as chief executive until a permanent replacement is found.

Wall Street responded with shock at the sudden departure of the man credited with HP's remarkable turnaround since 2005. Mr Hurd came to prominence in the industry running NCR, a manufacturer of cash machines, and was hired after a period at HP following the ouster of Carly Fiorina. Under his leadership HP has slashed costs, revitalised its line of computers and servers and dramatically increased its IT services business, overtaking Dell as the market leader in the process.

Nehal Chokshi, analyst at Technology Insights Research, said: "The positive leadership HP has had under Mr Hurd is identified with his name, so it is a short-term negative, but they do have a strong team behind him including Cathie Lesjak. Obviously with such a big company, $125bn in revenue, one person alone can't make it run crisply."