Surprise! HP names Leo Apotheker CEO; Can he rewrite his legacy?

Surprise! HP names Leo Apotheker CEO; Can he rewrite his legacy?

Summary: In a move sure to surprise, Hewlett-Packard on Leo Apotheker CEO. For Apotheker it's a chance to rewrite his legacy after being ousted from SAP.

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Updated: In a move sure to surprise, Hewlett-Packard on Thursday named Leo Apotheker CEO. Apotheker was ousted from SAP in February.

Along with the move, HP named Ray Lane, partner at Kleiner Perkins Caufield & Byers, to its board of directors as non-executive chairman. Lane happens to be an expert about competing with Oracle. Both Apotheker and Lane start Nov. 1.

In a statement, HP's Robert Ryan, lead independent director of the board, said:

“Leo is a strategic thinker with a passion for technology, wide-reaching global experience and proven operational discipline – exactly what we were looking for in a CEO. After more than two decades in the industry, he has a strong track record of driving technological innovation, building customer relationships and developing world-class teams.”

Indeed, Apotheker---an affable fellow who can be combative from time to time---takes the helm as IT giants are offering integrated systems. Oracle pushes the Exadata and Exalogic boxes, which integrate and optimize hardware and software systems. HP could answer the Oracle threat by acquiring SAP. Apotheker spent 20 years at SAP and was primarily known as a sales savvy executive when he took over as CEO. HP said Apotheker "transformed R&D and technology platforms and expanded business models and customer segments." Apotheker was ousted from SAP earlier this year as the enterprise software company named co-CEOs.

A management do-over?

In many respects, Apotheker gets a second chance to rewrite his management legacy. Apotheker was pushed out due to delays in SAP's Business ByDesign on-demand suite as well as the inability to set and communicate a technology vision. Meanwhile, employee morale at SAP fell. According to a SAP memo announcing his departure, Apotheker acknowledged:

The pace of change was rapid, probably too rapid for some. My communication towards you was not always optimal and the results of the employee survey did not completely come as a surprise to me given what happened during the time of the survey.

Apotheker's mission now: Take his learnings from the SAP experience and combine it with his global perspective to take on the likes of IBM as well as Oracle. In a statement, Apotheker said that he was honored to run HP. Apotheker will succeed Cathie Lesjak, who was named interim CEO when Mark Hurd resigned over a sexual harassment probe. Hurd wound up at Oracle, which should make some interesting discussions since HP and Oracle are partners.

Will HP acquire SAP?

The move raises a bevy of questions:

  • Will Apotheker, a software guy, bolster HP's software portfolio, notably with the acquisition of SAP?
  • Will Apotheker effectively run the hardware business?
  • How about a services unit that competes with IBM?
  • Can Apotheker connect with HP's board over the long run and high-level executives?
  • Can Apotheker effectively keep insiders---Todd Bradley and David Donatelli for instance---so critical to running the company?
  • Does Apotheker have what it takes to push HP on the consumer design side of the equation?
  • Will Apotheker energize HP engineers and sales folks?

Of those questions the biggest one will revolve around HP's potential acquisition of SAP. HP and SAP have a common enemy: Oracle. Meanwhile, HP has the resources to acquire SAP. And SAP's ownership of Sybase plays well with the enterprise mobility theme HP has been targeting via the acquisition of Palm.

SAP co-CEO Bill McDermott told Bloomberg TV:

SAP and HP are really good partners... for SAP this is a net positive. For our competitors in Redwood Shores, this is a net negative, so I'm looking at this with bright eyes.

Leo is a very global guy. He really understands the market and clearly understands this high-tech industry. He's very customer-driven... All in all, he's just perfect for us because he knows we're the best business software company in the world.

Early reaction

The Enterprise Irregular list was all over the map with early reaction. Some experts didn't get the Apotheker move at all. Others thought Apotheker's software expertise made him an interesting fit.

Vinnie Mirchandani said HP's move should be viewed in the context of Apotheker and Lane as a combo package.

Mirchandani wrote:

While Leo does not have the diverse technology background Ray does, he makes up for it in his global reach. Last time we exchanged notes on countries visited he had me beat by 40 countries and I have been to a few myself. A definite Polymath in the geographic dimension. So, HP is getting a  nice two-fer package.

ZDNet's James Farrar said that Apotheker could step up HP's sustainability efforts.:

HP announces both the appointment of Leo Apotheker as its new CEO and a simultaneous donation of $5 million to the Newseum for defense of first amendment rights. Could sustainability and corporate responsibility in the vein of the values of its founders be again on the march at HP?

Dennis Howlett noted:

When thinking about character, something that has been lacking at H-P for some time, Apotheker ticks my boxes. Sales? Yes - he’s up there with the best. Strength of will in keeping cost under control? Another box ticked. Engineering friend? No and that’s potentially a real problem for the company as it needs to innovate across multiple product lines. Has he learned from his SAP top spot experience? We cannot know but my gut instinct is that he will have taken away huge lessons and having some time to reflect is always useful. My only caveat is whether ego will get in the way of his making good choices.

Wall Street was mixed. Shares of HP fell afterhours a bit, but nothing alarming. ISI Group analyst Abhey Lamba said in a research note:

While we believe the new management team will bring in a fresh perspective to HP, we wait to hear the new team’s vision for the company given its broad portfolio within the technology space. Considering Mr. Apotheker’s strong background in application software, it will be interesting to see if HP will become more aggressive in the software space and move beyond the systems management arena.

More reaction will pour in Friday following HP's 9 a.m. EDT conference call.

Topics: IT Employment, CXO, Enterprise Software, Hewlett-Packard, Legal, Software

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20 comments
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  • Does he understand INK?

    One of the HP mainsatys - INK and how to get people to buy more of it should be his first action - the rest will just follow. Its al about commodity - not long term repeatable extremely costly software upsales- gonna be a big ask.
    lou@...
  • RE: Surprise! HP names Leo Apotheker CEO

    Duh..how about services? There was not a mention of it in the questions to be answered section? Ink? PCs? Printers? As the previous poster acknowledged, they are all commodities which can hardly be considered a growth business. For HP to have any growth it needs to be focused on higher margin offerings. HP is years behinds IBM on that account. IBM shed most of their consumer stuff long ago and has been focusing on strategic consulting and value added software and services (Global Services and Business Intelligence acquisitions come to mind). Despite their stodgy/square image, they appear to understand the pulse of business and have a good read on the market and its future. HP, however, simply appears to be resting on its past glory instead of moving forward. HP needs to make its mind up about what it wants to be when it grows up: A supplier of commodities (ink, calculators, printers, laptops/PCs) or as a true business thought leader (services and software)

    As to Apothekar, it will remain to be seen. I guess I agree with the headlines of shock over hiring an "unknown CEO", but at the same time, am glad that the appointment came from the outside.
    cranky@...
  • I could see three moves out of this for HP ...

    1) Spin off PCs and Printers as a standalone technology company. They are profitable so they could be self-supporting.<br>2) Buy SAP for the enterprise software business.<br>3) Buy EMC for the storage business.<br><br>We can then watch the 4-way battle for enterprise computing: HP, IBM, Oracle and Cisco. If Cisco is smart, they would buy Dell's server and services business. I don't see any upside for the enterprise companies to be in the end-user device business, the margins are low and there is no loyalty or affinity that would pull customers to "one-stop-shop".<br><br>Eventually the field might go down to three if Oracle and Cisco merged. They have relatively little overlap, while HP and IBM already have significant networking capabilities.
    terry flores
    • RE: Surprise! HP names Leo Apotheker CEO

      @terry flores As much as I would LOVE to see HP buy out EMC (they are HP's biggest storage competition), that would be like Wal-Mart buying out Target. EMC owns 80% of VMWare's stock and they are just too big to buy. That being said, I agree with the philosophy and hope to see this happen one day!
      Mainframe_Matt
  • Really, HP Board?

    Why in the hell did this company hire an ousted CEO instead of promoting from within? To make a statement to Larry Ellison? Really? This smells like more immature corporate malpractice.
    spinchange
    • RE: Surprise! HP names Leo Apotheker CEO

      @spinchange You are exactly right. This is a bizarre move by a board that has clearly lost the plot. IBM is the main problem on the server side. Oracle, Cisco-EMC, and Dell should all be farther down on the worry list.
      brien@...
  • HP is schizophrenic

    You've got the commodity business of PC's that requires execution. You've got the supply business of ink that requires distribution. You've got the service and storage business that requires talent. And you've got the mobile business that requires vision. No one person can be both knowledgeable and enthusiastic about each of these businesses.
    Info-Dave
  • HP **CAN NOT*** acquire SAP -- the latter costs 2/3 of HP

    <b>Only merge is possible</b>, though it hardly makes sense.
    DDERSSS
  • HP SAP acuistion

    A SAP acquisition might make sense for HP, but they already have of issues to deal with already. A SAP acquisition would take a lot of resources and capital. The other is whether HP wants to take Oracle head on in their core business. It could put significant pressure on Oracle and weaken their efforts with the Sun division.
    randall.shimizu@...
  • Larry Ellison, Ray Lane and HP.

    Larry Ellison is a smart guy. I'm sure that he thought through hiring Hurd well in advance. Ray Lane was an Oracle veteran. I think that HP wants it's revenge on Hurd, but this is the wrong approach for HP and may cost it dearly. The new CEO is not the best fit.
    Smart_Neuron
  • The real question in my mind...

    Can HP adjust to the new CEO and do it quickly. Apotheker is known for pushing R&D hard (maybe too hard) and that just isn't an HP trait IMHO.
    No_Ax_to_Grind
    • RE: Surprise! HP names Leo Apotheker CEO

      @No_Ax_to_Grind
      Was not the "little too hard" toward the end of his time with SAP? From what I read, he appears to recognize this mistake so I can only hope his recognition translates in to action.
      Viva la crank dodo
  • RE: Surprise! HP names Leo Apotheker CEO

    why not Leo Laporte ( leoville.com/ )
    bunfun2005@...
  • RE: Surprise! HP names Leo Apotheker CEO

    Leo Laporte would have been great!
    Man0Man0
  • RE: Surprise! HP names Leo Apotheker CEO

    HP Board Cans Hurd, for whatever, he has lowest employee survey score ever at HP. HP Board searches the World Hires the CEO that was "Pushed Out" in January 'cause he had lowest employee scores in history! HP Board to 300,000+ HP employees We Just don't care what you think.
    Man0Man0
    • RE: Surprise! HP names Leo Apotheker CEO

      @Man0Man0 Haha, so true! I may or may not work for HP and on our internal broadcast He was dodging questions left and right! He is a politician and a face for the company. I don't believe that in a company this big that the CEO is a legitimate business decision maker.
      Mainframe_Matt
  • Leo Apotheker CEO or Circus performer?

    I don't care who Apotheker is or was, He had better come to terms with the way HP works NOW and improve on that system to compete on several fronts! The relative size of HP will be a juggling act for someone who is not used to having the varied types of divisions they have running at the same time! Cause let's face it, Oracle is basically a one trick pony, whereas HP has everything from consumer to enterprise offerings! It will be a learning curve for Leo, and it has to be a short one to keep them from loosing ground to the likes of not only Oracle, but Apple and IBM. Here's wishing him good luck! (He'll need it!)
    barefoot1976
  • Leo Apothker was a disaster for SAP...good luck to my friends at HP

    Did HP conduct due diligence on Leo? Or did they take his word for it? Perhaps they maybe called his three references - the few people Leo could manipulate to say positive things? What about the many customers, employee, former executives and major partners that he alienated in his tenure as CEO (must be among the shortest in history of major tech)? Leo did not resign from SAP...he was pushed out for all the reasons of a poor leadership and management. The tyrant style of leadership that forces function rather than inspires or motivates is his only mode of operating. I just don?t see this German/Parisian fitting well in Silicon valley. He cannot hold a up (as much as his ego would suggest it to be the case) against Palmisano nor his secret (he won?t admit it) idol - Larry Ellison. This is another strange move. I will pray for my friends at HP.
    JD Moore
  • Yikes

    SAP -the worst customer service on the planet. Just ask the users.
    hobbie1
  • RE: Surprise! HP names Leo Apotheker CEO

    great post and creative ideas. I am happy to visit and read useful articles here. I hope you continue to do the sharing through the post to the reader. www.ritalinworld.com
    markadam147