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

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.
Written by Larry Dignan, Contributor

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.

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